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The 2024 Forecast: Top Takeaways 

Highlights from the latest construction forecasts reflect a U.S. economy that is shadowed by inflation, higher interest rates, labor challenges and geopolitical risk 

Editor’s Note: The following is based on forecast presentations from the 2024 Annual Outlook Forecast Conference from Dodge Construction Network, the Construction Economy Outlook semiannual webcast by ConstructConnect, and Connor Lokar’s annual economic forecast keynote presentation from GlassBuild America 2023. 

Economic uncertainty hung over 2023 and is carrying over to 2024, but many industry experts remain cautiously optimistic about the year ahead, predicting a stronger and more consistent construction market. 

Economy on edge, economists split on recession predictions 

Overall construction starts are expected to rise 7% in 2024, following a 1% increase in 2023, according to the Dodge forecast. The 2023 increase will bring total starts to an estimated $1.124 trillion, with $1.206 trillion forecast for 2024. 

In looking at the macroeconomic pressures facing the U.S. economy, including stubborn inflation, high interest rates, tight lending standards, labor shortages, rising energy prices and geopolitical turmoil, it’s impressive that the economy has remained recession-free. Resilient consumers, a healthy labor market, and public funding for manufacturing and infrastructure helped, but the challenges of 2023 will shift over into 2024, according to Richard Branch, chief economist for Dodge Construction Network. 

“We’re anticipating that 2024 will bring about more consistent growth, as well as more opportunity in the construction sector,” says Branch, “but the economy will remain challenged at least over the next three to six months [of 2024]. Still, we’re remaining confident that the U.S. economy will remain recession-free.” 

Branch, however, adds that this is dependent on the assumption that the Federal Reserve is done raising interest rates. Dodge forecasts that the Fed will start cutting rates around the midpoint of 2024. “The takeaway here is we know the construction sector is an extremely interest-rate-sensitive portion of the economy, particularly in sectors like the residential market,” says Branch. “We think that by the end of the year, the U.S. economy is going to be on much more stable footing, which should create more opportunity in the construction market.” 

Other economists are not as optimistic. During a presentation at 2023 GlassBuild America, Connor Lokar, senior forecaster, ITR Economics, projected that the overall U.S. economy will most likely enter recession in the coming months. Lokar anticipates the recession will be mild but will demand that companies plan for a downturn to ensure they are protected, and may even offer time for them to explore new opportunities during the slower business cycle. “This is not going to be as bad as 2008 or 2009. The businesses that will get into trouble are those that don’t plan for it,” he says. 


  • Dodge estimates that U.S. gross domestic product growth will slow in 2024. 

  • The Congressional Budget Office forecasts GDP to speed up, averaging 2.4 percent a year from 2024 to 2027, in response to projected declines in interest rates. 

Inflation is still volatile but slowly stabilizing 

In terms of major economic indicators, inflation has remained at the top of the list over the past year. “We’ve seen significant progress over the last year,” says Kermit Baker, chief economist, American Institute of Architects. “A year ago, [the numbers] were a little over 8%. A few months ago, we saw them hit a low of 3%; they’ve come down dramatically. Generally, we’re moving in in the right direction, even though we’re not done with the inflation issue yet.” 

Alex Carrick, chief economist, ConstructConnect, shares the sentiment on falling rates. “As interest rates stabilize and then begin to decline after Q1 or Q2 of [2024], the homebuilding sector will revive.” 

“What we’re seeing from an interest rate perspective, it’s hard for developers to make the returns, and they’re going to seek returns elsewhere,” says Jay Bowman, principal, FMI Corp., referencing private construction. 


  • The Federal Reserve’s latest macroeconomic projections indicate a gradual reduction in inflation rates, averaging 2.5% in 2024, decreasing to 2.2% in 2025 and aligning with the Fed’s 2% target by 2026. 

  • Credit should start easing during the back half of 2024, but the banking sector will continue to be skittish, says Branch. 

  • Construction expenditures are forecast to increase 3.7% yearly in nominal terms through 2024, according to the Construction: United States report by Freedonia Group. 

Material price inflation about to turn 

Talk in the construction industry has been dominated by the issue of bid and material prices, and Dodge’s Branch says that the industry will continue to see good news. “It [composite index of building materials] is contracting after that steep run-up that we saw in the wake of the pandemic.” 

Supply chains also improved in 2023, with the Global Supply Chain Pressure Index hitting a historical low in October 2023 and almost all material divisions seeing stable or improving lead times, showing that supply disruptions are in the rear-view mirror, for now, according to real estate and investment management JLL Capital Markets.  

Labor challenges continue 

Limited labor availability is expected to persist for the long term, according to the U.S. Bureau of Labor Statistics. Due to ongoing shortages and an increase in people leaving the industry, overall growth of the construction labor force will slow from its current, already inadequate, pace in 2024. While advancements in technologies can ease some of these pressure points the labor market causes, it cannot fully replace the need for labor. 

“The number of people hired has been tailing off. You might think that indicates a declining demand for workers, but I think it indicates how hard it is to find workers to fill those positions,” says Ken Simonson, chief economist, Associated General Contractors of America. “The unemployment rate in construction has come all the way down to the same level as the overall economy, to 4% or less, and that’s really exceptional.” 

In North America, as the industry faces skilled labor shortages and falling productivity, competency and efficiency will be increasingly valuable among the workforce. Retention and upskilling are critical for the next year and beyond. 

“The big challenge for contractors is going to continue to be finding workers,” says Simonson. “And I think that will be with us for many years.” 

Companies may wish to take advantage of broader incentives, like the Inflation Reduction Act tax credits available for companies who hire registered apprentices, which may build demand for apprenticeship programs, potentially expanding workforce training opportunities and benefitting employers. 


  • The BLS projects that the labor force participation rate will continue to decline in 2024, although at a slower rate than that seen before the onset of the 2007–09 recession, falling 2.0 percentage points to 60.9% in 2024. 

  • Simonson forecasts that construction wages will rise 5% to 7% over the next year. 

  • The Associated Builders and Contractors report the construction industry needs more than 342,000 new workers in 2024 and expects an increase in staffing in the first half of 2024. 

Geopolitical conflicts and trade tensions loom 

The Israel-Hamas conflict raises concerns about potential wider Middle East tensions, possibly impacting energy and other raw material prices. U.S. sanctions on Iran could further escalate these issues, and the ongoing tensions between the U.S. China could also stoke inflation. 

In February, the Aluminum Extruders Council reported on the White House proclamation adjusting imports of aluminum into the U.S. and significantly increasing costs for aluminum smelted or cast in Russia. Tariff rates on most metals and metal products will double from 35% to 70%. U.S. imports of unwrought aluminum and alloys from Russia amounted to 191,809 tons, or roughly 4.4% of the more than 4.4-million-ton total last year, compared with 8.9% in 2018 and 14.6% in 2017. 

Rising energy prices and geopolitical tensions are new risks added to the matrix that Dodge examines. Branch also cited rising tensions in Russia, Ukraine and the Middle East as possible obstacles in the coming year. “Geopolitical risk remains intense,” he says, but Dodge forecasts that “tensions will start to ease in the coming three to six months.” 


  • The U.S. initiated a 200% tariff on all Russian-made aluminum in February 2023, which applies to about $2.8 billion worth of materials. 

  • Chinese materials used in the glass, glazing and metal industries are still subject to the 10% tariff that went into effect September 2018, despite a U.S. International Trade Commission report that found American importers have borne most of the costs. 

  • In June 2023, the Aluminum Extruders Council asked the Commerce Department to reform its tariff exclusion process for U.S. aluminum extrusion products. 

High rates, lending standards hurting residential starts 

Residential Construction Starts 


  • -13% 720,000 units | Apartments, two-family houses 
  • -12% 816,000 units | One-family houses 


  • +3% 740,000 units | Apartments, two-family houses 
  • +3% 845,000 units | One-family houses 

Single-family construction organically leads the construction sector into decline or recovery, according to Branch. “Residential leads commercial buildings, like retail leads institutional buildings like hospitals and schools.” Dodge forecasts that the total dollar value of residential starts is expected to end 2023 down 13%, before rising 11% in 2024. 

“The residential market split, with single family going one way toward a pseudo recovery, and multifamily going the other, peaking in December 2022, and falling since,” adds Branch. 

However, Danushka Nanayakkara-Skillington, assistant vice president for forecasting and analytics, National Association of Home Builders, predicts that residential construction will finish 2023 down 11%, dropping an additional 3.4% in 2024, due to “over 1 million [units currently] under construction.”  

ConstructionConnect’s Carrick believes that falling rates are the key to a thriving residential market. “As interest rates stabilize and then begin to decline after Q1 or Q2 of [2024], the homebuilding sector will revive.” ConstructConnect’s forecast predicts a 4.4% increase in 2024 for total residential starts, with a more robust 15% increase expected the following year. 

Single family—Starts tied to mortgage rate pressures 

“There’s a growing sense here that the single-family market is at least past the bottom.” Richard Branch, Chief Economist, Dodge Construction Network 

In the residential sector, Dodge predicts single-family construction will end this year down 12%, measured in units, before climbing 3% in 2024. Branch notes that while the bottom for single-family starts has passed, mortgage rates need to ease before the sector will see stronger growth. “New home sales, tightly correlated to new home construction starts, are up 5% on a year-to-date basis [as of November 2023],” says Branch. “With mortgage rates where they are, we’re not going to see a big run up in single-family construction anytime soon. People are still buying homes right now even with mortgage rates where they are.” 

Branch believes that downward pressure on mortgage rates will come in Q1 2024, creating more stability and propagating single-family construction through late 2024 and 2025. 

“The market needs lower interest rates for people to consider selling their homes that they refinanced when rates were low,” Lokar says. 

Multifamily—Recalibration and increase for 2024 

Multifamily work is expected to follow a similar pattern, dropping 13% by the end of 2023, with a 3% increase in 2024. Following a peak at the end of 2022, starts in this sector have declined, due in part to tightening credit standards for multifamily and slowing household formation, with younger people cohabitating or living with family, lowering demand. Still, says Branch, this is simply a fall from the peak of activity. “[Before 2021], these are the highest levels for multifamily construction, going back to the ‘80s,” says Branch. “There’s still a lot of activity going on, so perhaps this is just a recalibration or a realignment following a little rush of development in 2021–2022.” 

Companies that leaned into multifamily contracts during the sector’s boom of the last several years should prepare for slowdown in the near term, Lokar says. “If you’ve been living off multifamily, [the sector] is entering recession,” he says. “Starts were down 28.1% in the last quarter, and permit pulls have cratered.” 


  • The National Association of Home Builders projects that residential construction will drop 3.4% in 2024, single family will rise 3.7% in 2024, and multifamily will see a 17.3% decrease next year. 

  • Lokar believes that the single-family market is now bounding into recovery, but that multifamily is heading for a tough year. 

  • Branch says consistent new home sales around the 700,000-unit range through the first nine months of this year are needed; currently it’s at about 684,000 units a month. 

  • FMI Corp. predicts the residential market will fall 7.1% in 2024; private multifamily could be down close to 20% by 2025. 

  • Dodge predicts infrastructure growth with a 13% rise in sewage and waste disposal and a 21% rise in water-supply systems, indicators that point to the demands of a growing population and a rise in new single-family and multifamily development.  

Commercial construction edges lower 

The commercial sector, which includes stores, offices, warehouses and hotels is expected to fall 6% to $156 billion in 2023, then another 2% to approximately $153 billion next year, Dodge predicts. “If you pull the warehouse sector out of that minus 2%, construction starts for commercial are actually positive,” says Branch. 

“Commercial construction pretty much moves lock-step with the economy, and follows the single-family market,” Branch continues. “The economy slows down construction, and commercial starts slow down with it.” 

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Tara Lukasik

Tara Lukasik

Tara Lukasik is managing editor for Window + Door and its sister publication, Glass Magazine. Reach her at