A very good year indeed.

Although residential construction eased back in December of 2005, the non-residential and infrastructure segments ended the year with modest growth, according to McGraw-Hill Construction, Lexington, Mass.

The December results concluded what was a very strong year overall for the construction industry, as the value of new contracts gained by some 10 percent across all segments compared to the year before.

"Higher materials prices appeared to dampen the non-residential sector at the outset of 2005, as developers deferred and redesigned projects to deal with rising costs," says Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "At the same time, market fundamentals such as occupancies and rents improved, and this helped nonresidential building to regain an upward trend as the year progressed. The 2005 construction market also featured a robust performance by single-family housing, which established a new annual high. By year's end, though, homebuilding began to ease back, and the extent to which this cooling off continues will be a major factor shaping the 2006 construction market."

For 2005 as a whole, total construction advanced 10 percent to $651.4 billion in contract value. This was close to the 11 percent increase reported for 2004, and well above the 2 to 5 percent annual growth during the 2001-2003 period.

In December, non-residential building activity increased by 2 percent, bolstered by a large gain in the health care facilities segment of 27 percent. On the negative side, December showed weaker activity in segments such as school construction, amusement-related projects, public buildings, churches and transportation terminals.

For 2005 as a whole, non-residential building activity increased by 5 percent as measured by contract values, with much of the growth coming from institutional structures such as schools (up 8 percent), health care facilities (up 18 percent), and public buildings (up 9 percent). Church construction values, however, were down 11 percent.

On the commercial side, results were mixed for 2005. Store construction advanced 4 percent, while hotel construction jumped 22 percent, and the manufacturing building category in 2005 grew 5 percent in dollar volume, helped by the start of three large semiconductor plants. But warehouse construction was down 4 percent, and the office segment was down 11 percent.

Values of new contracts in the infrastructure segment advanced by 7 percent in 2005, with the prominent highways and bridges categories showing respective gains of 5 percent and 13 percent compared to 2004.

By region, total construction during the first ten months of 2005 showed the South Atlantic up 13 percent, the West up 11 percent; the Northeast up 9 percent; the South Central up 8 percent; and the Midwest up 2 percent.

U.S. CONSTRUCTION CONTRACT VALUES

                          % Change     2005       2004

Residential                 +14%     $378.4 *   $332.5 *
Non-Residential Const.       +5%      171.8 *    163.4 *
Infrasfructure               +7%      101.2 *     94.5 *

Total                       +10%     $651.4 *   $590.4 *

Source: McGraw-Hill Construction

Note: Table made from bar graph.