Ed Sullivan, chief economist and sr. vice president of market intelligence for the Portland Cement Association (PCA), says the Federal Reserve’s recent move to lower interest rates coupled with easing inflation will benefit construction activity.
At PCA’s annual fall meeting held in Aurora, Colorado, Sullivan said it will take time for the impact of the Fed’s policy pivot to materialize in the economy and construction. Near term, construction activity is expected to be burdened by oppressively high rates. As more cuts transpire, construction loan rates are expected to decline, spurring new life into the construction market by mid-2025.
Although nonresidential construction will benefit from lower interest rates, it will take time to improve occupancy rates and a higher net operating income. These will come as the economy gains momentum next year. Given this, nonresidential is not expected to see recovery until 2026.
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