U.S. construction starts are projected to total $808 billion in 2019, essentially level with the current year’s pace of activity, according to a report by Dodge Data & Analytics.

Maryland-based Dodge Data said nationwide construction activity peaked between 2012 and 2015, but growth has slowed as the economic cycle matures.

“There are, of course, mounting headwinds affecting construction, namely rising interest rates and higher material costs, but for now these have been balanced by the stronger growth for the U.S. economy, some easing of bank lending standards, still healthy market fundamentals for commercial real estate, and greater state financing for school construction and enhanced federal funding for public works,” Dodge Chief Economist Robert A. Murray said in a statement.

Among the highlights of this year’s report:

• Single-family housing will be unchanged in dollar terms, alongside a modest 3 percent drop in housing starts to 815,000 (Dodge basis). There will be a slight decline in homebuyer demand as the result of higher mortgage rates, diminished affordability, and reduced tax advantages for home ownership as the result of tax reform.
• Multifamily housing will slide 6 percent in dollars and 8 percent in units to 465,000 (Dodge basis). Market fundamentals such as occupancies and rent growth had shown modest erosion prior to 2018, which then paused this year due to the stronger U.S. economy. However, that erosion in market fundamentals is expected to resume in 2019.
• Commercial building will retreat 3 percent, following 2 percent gains in 2017 and 2018, as well as the substantial percentage increases that took place earlier. While 2018 market fundamentals for offices and warehouses are healthy, next year vacancy rates are expected to rise as the economy slows, slightly dampening construction. Hotel construction will ease back from recent strength, and store construction will experience further weakness.
• Institutional building will advance 3 percent, picking up the pace slightly from its 1 percent gain in 2018 which itself followed an 18 percent hike in 2017. Educational facilities should see continued growth in 2019, supported by funding coming from numerous school construction bond measures. Healthcare projects will make a partial rebound after pulling back in 2018. Airport terminal and amusement-related projects are expected to stay close to the elevated levels of construction starts reported in 2017 and 2018.
• Manufacturing plant construction will rise 2 percent following the 18 percent jump that’s estimated for 2018. The recent pickup in petrochemical plant projects should continue, and cuts in the corporate tax rate from tax reform should encourage firms to invest more in new plant capacity.
• Public works construction will increase 4 percent, reflecting growth by most of the project types. The omnibus federal appropriations bill passed in March provided greater funding for transportation projects that will carry over into 2019, and environmental-related projects are getting a lift from recently passed legislation.
• Electric utilities/gas plants will drop 3 percent, continuing to retreat after the exceptional amount reported back in 2015. New generating capacity continues to come on line, dampening capacity utilization rates for power generation.