Housing Slowdown Making 2007 a Harder Year for Cement
Even with non-residential and public construction moving ahead at a healthy clip, cement consumption is expected to be up only 1.5% this year as the result of weakness in the housing industry, Ed Sullivan, chief economist for the Portland Cement Association, said in his spring forecast last week.
Sullivan’s forecast for cement consumption this year projects a decline of nearly 6 million metric tons from the amount of cement used in residential construction in 2006. “Single-family starts activity and residential cement consumption will not recover until the existing inventory level of homes is reduced,” he said.
However, after a weak first half, declines in housing starts “will turn to gains by the end of the year,” he added.
On a year-over-year basis, single-family home sales will post gains in the second half of 2007, a trend that should continue into 2008 and 2009, contributing to an estimated 3.9% increase in cement construction next year. At the height of the housing boom, cement consumption was growing at an annual rate of 5.5%.
A 33% increase in asphalt prices during the second half of 2006 along with hefty increases in steel prices should start giving a competitive edge to cement during the second half of 2007, Sullivan added.
While the outlook remains favorable, albeit a bit lackluster compared to the years prior to the housing downturn, Sullivan did caution that the odds of the economy unraveling have increased significantly over the last year, largely because consumers are not in the best shape to sustain their recent levels of spending.
Also, a sudden outflow of foreign capital from U.S. markets could result in an unanticipated increase in interest rates that would create a “vicious circle” of defaults and tightening credit in the home mortgage market, he warned.
Even so, Sullivan calculated the odds of an imminent recession at no higher than one in three and said that the risk is about 25% according to a survey of economists.
Is the Housing Correction Over? Attend Construction Forecast Conference on April 26
Will housing demand outweigh affordability hurdles, inventory overhangs and the retreat of investors? Where are home prices headed?
Get the answers to these and other questions at the Construction Forecast Conference — Spring 2007 on April 26 in Washington, D.C.
Panels of nationally recognized experts will discuss economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys at the day-long conference.
For more information and to register, click here.
Can't Attend in Person? Webcast of Conference Also Available
The conference is also available via Webcast. For Webcast information, visit www.nahb.org/cfcwebcast.
Attend the Concrete Technologies Tour on May 6-8
The latest advances in concrete construction, production, materials and design will be showcased at the 2007 Concrete Home Building Council Concrete Technologies Tour in Minneapolis on May 6-8.
The tour will feature educational programs, networking and behind-the-scenes tours of six cement-based building materials and manufacturing facilities.
For more information and to register, visit www.nahb.org/concretetour.
Want to Know Your State’s Starts Forecast for 2008?
Find out in HousingEconomic.com’s State Starts Forecast (sample). The starts forecast includes downloadable Excel tables of total, single-family and multifamily starts by region and state.
To learn more, visit www.housingeconomics.com.
NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market
With the current cooling of the nation’s housing market expected to persist into the middle of the year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.