Residential and commercial construction in the Houston metro area has increased significantly this year.
More than $25 billion in construction contracts — including everything from single-family homes to schools and hospitals — were awarded through the first seven months of the year, marking a 36 percent increase from the $18.6 billion awarded over the comparable period last year, according to the Greater Houston Partnership and Dodge Data & Analytics, the Houston Business Journal reported.
Residential construction saw $9.6 billion in contracts awarded during the seven-month period, marking a 32.1 percent increase from the same period last year. Meanwhile, non-residential construction, including commercial buildings and institutional projects, such as medical buildings and public recreation centers, reached $11.6 billion — a 68.8 percent surge over last year.
Most of the development was concentrated in Harris County, which accounted for roughly $15 billion, or nearly 60 percent of all contracts. Montgomery and Fort Bend counties saw more than $3 billion in contracts. Brazoria County followed, with almost $2 billion.
Resilience of the housing market and lower-than-expected interest rates contributed to the upward trend, said Patrick Jankowski, chief economist at the Greater Houston Partnership. Mortgage rates peaked at 7.8 percent last October and are sitting at 6.4 percent, which has helped sustain home-buyer demand, he said.
“The recession that everyone expected in 2023 never materialized,” Jankowski told the outlet.
Projects that have been on hold or in the planning stages for years have started construction, he said.
For example, Transwestern started construction this summer on a 500,000-square-foot office building with retail and a parking garage at The RO urban village, near River Oaks. The project has been in the planning stages since 2017.
The influx of residents from out of state has further boosted the market, as local builders adapt to shifting needs with tailored financing packages, such as mortgage-rate buydowns.
Institutional and hospital construction tends to increase when private development slows, Jankowski said. Despite these encouraging trends, he remains cautious about the future, citing uncertainties about interest rates, the possibility of a recession and political factors that could affect the economy.
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“For now, the construction market is healthier than it has been for several years,” he said. “The industry is in a good spot for whatever happens next year.”
Not all construction categories enjoyed the same level of success. Non-building contracts, which include infrastructure projects such as highways, streets, and utilities, dropped to about $4 billion from $4.4 billion during the same period last year, a 9.2 percent decrease.
— Andrew Terrell