In a joint economic update presented last month, economists from Associated Builders and Contractors (ABC), American Institute of Architects (AIA) and National Association of Home Builders (NAHB) were generally optimistic about the nonresidential and residential construction sectors heading into 2015, despite a slow recovery to date and reports of sporadic improvements in backlog and architecture billings.

According to ABC Chief Economist Anirban Basu, nonresidential construction put-in-place is building momentum, particularly in the energy/power, office, conservation/ development and lodging categories. In contrast, the public safety, health care,
communication and education sectors continue to lag. In terms of construction jobs, Florida, California, Texas, Pennsylvania, Minnesota, New York, Illinois, Washington, Colorado and Utah are seeing the most growth, while New Jersey, Arizona, Alabama, Kentucky and New Mexico are on the low end. As the economy gains strength, Basu says to keep an eye out for evidence of wage inflation and rising materials prices.

AIA Chief Economist Kermit Baker notes commercial property values are improvingand architecture billings are trending back up—with the south reporting the strongest business conditions for the past two years. Looking ahead, Baker predicts single-digit growth for commercial construction this year followed by double-digit growth in 2015. Institutional construction will stay flat this year and should experience single-digit growth in 2015.

In the residential market, NAHB Chief Economist David Crowe says the slow recovery largely is tied to marginal income growth, especially among younger people who tend to be first-time homebuyers. Multifamily is still the star performer, but will begin to taper off as supply catches up with demand. There’s strong growth in apartment construction, but single-family homes will struggle to reach “normal” construction levels by the end of 2016, according to Crowe.