2021 Building Industry Forecast

Hello 2021!

2020 was a wild ride of a year in the building industry and fortunately it looks like 2021 will have a much more optimistic outlook overall. Many projects that were shut down last year will have a chance to be completed in this one.

You may need to act quickly though if you have a 2021 project lined up. Lumber prices in the US have risen steadily since the Covid-19 outbreak began due to an increase in demand combined with lumber mill shutdowns.

So if you have a project coming up in 2021, now is a great time to source out your materials and lock in the resources you will need to complete your project on time and within your budget.

Not all building markets are the same when it comes to supply and demand. Some parts of the building industry are going to do better in 2021 than others. Keep reading to hear who the winners will be in 2021. 

Residential Projects:

Record low mortgage rates have increased the overall demand for residential housing and in fact, spending on U.S. construction projects increased 0.9% in November. This was good news for architects, contractors and builders as the strength in home building offset weakness in other parts of the construction industry.

The November gain followed an even larger increase of 1.6% in October and resulted in a construction spending going up 4.4% through the first 11 months of 2020 compared to the same period in 2019, according to the Commerce Department.

Because of this and other factors, it looks like contractors and other professionals serving the housing market are in the best position to weather 2021, according Ed Sullivan, Portland Cement Association senior vice president and chief economist.

While unemployment is up, Sullivan says that many of the demographic sectors that are buying homes are less affected than other groups. “Housing starts are expected to reach 1.3 million this year and 1.4 million next year, and should be the steadiest and strongest performer throughout the near term cycle.” 

The dollar value of starts for residential buildings should also increase 5% in 2021, and is the only sector which will exceed its 2019 level of starts thanks to historically low mortgage rates that boost single family housing.”

Non Residential Projects

In addition to increasing residential projects, the dollar value of commercial building starts is also forecasted to increase 5% in 2021. Warehouse construction will be the clear winner as e-commerce giants continue to build out their logistics infrastructure. 

Office starts will also increase due to rising demand for data centers (included in the office category) as well as renovations to existing space. Not surprisingly, retail and hotel activity will most likely languish into 2021.

Public Construction 

In 2021, institutional construction starts will increase by a tepid 1% as growing state and local budget deficits impact public building construction. Education construction is expected to see further declines in 2021, while healthcare starts are predicted to rise as hospitals seek to improve in-patient bed counts.

Public works construction starts will see little improvement as 2021 begins due to continued uncertainty surrounding additional federal aid for state and local areas.

As we are wrapping up 2020, the country continues to deal with the economic and health crises caused by the COVID-19 pandemic, forecasters are cautiously optimistic for the future but warn that meaningful growth is still several months away.

Most economists agree that growth will be slow and consistent throughout the end of the year and into 2021. This is good news for the building industry and we are hopeful that it will be a good year overall.

Here at Bear Creek Lumber, we have continued to see a high demand for our Western Red Cedar products, along with Alaskan Yellow Cedar, Douglas Fir and Port Orford Cedar for exterior siding, interior paneling, ceiling paneling, decking and trim.

Many people have run into lumber shortages recently due to the Covid-19 disruptions to supply chains and the increased demand for specialty lumber products as residential spending continues to lead construction numbers. 

Make sure you don’t get caught short handed for lumber supplies in 2021! 

We are recommending that all our customers plan ahead for their 2021 building projects and secure the lumber and other materials they will need ahead of time. 

Need help with your next building project? Request a quote here and/or call us at (800) 597-7191 with any questions.