CHICAGO—According to a new 2014 Outlook research report fromFitch Ratings, the US building materials industryshould have a good 2014. The agency projects that totalconstruction spending will increase 9.2% during the next year. Theprojected boost would be nearly double the projected 4.9% increaseduring 2013. The main driver will be a continuing strength in newresidential construction.

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Furthermore, according to Director Robert G.Rulla, “home remodeling spending stands to grow modestlynext year as housing turnover improves. The same holds true forcommercial construction spending, while public constructionspending should increase only slightly.”

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But even with these healthy increases, spending on newresidential construction will remain below historical averages.“From 1993 to 2012, spending on new residential constructionaccounted for about 30% of total construction spending,” theresearchers note. “From 2009 to 2012, spending on this sectorrepresented only 16% of the total. Fitch projects new residentialconstruction spending will increase to about 21% of total spendingin 2013 and 25% during 2014.”

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Fitch expects new single-family housing starts in 2013 will hit615,000, a growth rate of 15.0%, while multifamily starts will growabout 20% to 295,000. And despite the higher interest ratesexpected some time next year, relatively solid economic and jobsgrowth should push single-family housing starts in 2014 to 738,000and multifamily starts to 322,000, or over 1 million total. “Newhome price inflation should moderate next year, at least partiallybecause of higher interest rates,” the report says. “Average andmedian new home prices should rise about 3.5% in 2014.”

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Brian J. Rogal

Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.