McGraw-Hill Construction, part of The McGraw-Hill Companies released its 2009 Construction Outlook, which forecasts a drop in overall U.S. construction starts for next year, as the tough funding environment continues, construction projects are deferred, and financial stress gradually eases. Against this backdrop, the level of construction starts in 2009 is expected to decline 7%, to $515 billion, following a 12% decline predicted for 2008.

"The speed and scope of the events in September and October were startling," said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction - "Tighter lending standards are a major constraint for the construction industry. For single family housing, declines are continuing and showing no sign of an upturn. Home prices are continuing to drop, a 20% drop so far this year, and we expect another 10% decline through the first half of 2009. Then, things should level off. Store construction has taken the biggest hit; we're looking at a 30% decline in retail square footage starts this year."

Highlights of the 2009 Construction Outlook include:

- Single family housing for 2009 will be down 2% in dollars, corresponding to a 4% drop in the number of units to 560,000 (McGraw-Hill Construction basis).

- Multifamily housing will retreat 6% in dollars and 8% in units, after the sharp plunge witnessed during 2008.

- Commercial buildings will drop 12% in dollars and 15% in square feet, similar to the declines experienced in 2008. Stores and warehouses will continue to lose momentum, the office correction will be steeper, and hotel construction will finally pull back after its lengthy boom.

- Institutional buildings will slip 3% in dollars and 6% in square feet, as the financial crisis affects funding coming from states and localities.

- Manufacturing buildings will plunge 32% in dollars after an exceptional 2008 that was lifted by the start of several massive oil refinery expansion projects.

- Public works construction will fall 5%, given flat funding at the federal level combined with restraint by state and local governments.

- Electric utility construction will retreat 30% after surging 55% to a near record amount in 2008.