T
he construction industry in the Houston metropolitan area has experienced a significant surge this year, with over $25 billion in contracts awarded for various projects such as single-family homes, schools, and hospitals. This represents a substantial increase of 36% compared to the $18.6 billion awarded during the same period last year, according to data from the Greater Houston Partnership and Dodge Data & Analytics, as reported by the Houston Business Journal.

    Residential construction saw a substantial increase of 32.1% compared to the same period last year, with contracts worth $9.6 billion awarded during the seven-month period. Meanwhile, non-residential construction, including commercial buildings and institutional projects like medical buildings and public recreation centers, saw a remarkable surge of 68.8% over last year, reaching a total of $11.6 billion.

    Most of these developments were concentrated in Harris County, which accounted for approximately $15 billion or nearly 60% of all contracts. Montgomery and Fort Bend counties also saw significant activity, with contracts worth over $3 billion each.

    The resilience of the housing market and lower-than-expected interest rates have contributed to this upward trend, according to Patrick Jankowski, chief economist at the Greater Houston Partnership. Mortgage rates peaked at 7.8% last October and have since dropped to 6.4%, which has helped sustain homebuyer demand.

    Projects that were previously on hold or in the planning stages for years have now started construction, Jankowski noted. For instance, Transwestern recently began work on a 500,000-square-foot office building with retail and a parking garage at The RO urban village, a project that had 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 explained.

    Despite these positive trends, Jankowski remains cautious about the future due to uncertainties about interest rates, the possibility of a recession, and political factors that could affect the economy.

    In other news, Howard Hughes starts Houston's first mass-timber office project, while Castle Biosciences levels up with Partners' Friendswood HQ development. Bank OZK is also eyeing a major expansion in Houston.

    "For now, the construction market is healthier than it has been for several years," Jankowski said. "The industry is in a good spot for whatever happens next year."

    However, not all construction categories experienced equal 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, representing a 9.2% decrease.