CONEXPO-CON/AGG VIP SHOW GUIDE contains Floor Plans and a complete listing of companies exhibiting at the ConExpo-Con/Agg 2014 trade show in Las Vegas March 3-7, 2014. It also contains 2014 forecasts for the Aggregate, Concrete and Cement industries

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CONCRETE & CEMENT MARKET REPORT monthly payment by $150. Average monthly payments, however, remain 32 percent below the past cyclical peak. While affordability may become a concern in the back- end of the forecast, it is not expected to pose a significant threat to near-term stronger sales activity. • Consumer Willingness to Buy: Consumer attitudes, accord- ing to PCA's scenario, increasingly focus on the positive economic fundamentals rather than the adverse political uncertainty. This leads to rather significant second-half gains in sentiment. Furthermore, rising home prices may stir potential homebuyers to act more quickly. PCA believes the economic environment seems poised to sup- port strong annual gains in overall home sales. While distressed properties will remain on the market for years to come, they will play an increasingly less important role in sales activity. As fore- closures and short sales exit the market, the share of new home sales is expected to increase. Based on a 20-year average, new homes sales represented 14 percent of all home sales. Since 2009, this number was cut more than in half to 6.7 percent. This gradu- al refocusing on new homes is expected to add support to stronger new home construction outlook going forward. Homebuilders are unlikely to significantly accelerate con- struction activity until low levels in inventory of unsold new homes reflecting no higher than five to six months' supply. Over- all, home inventories currently stand at 2 million homes or five months' supply. This represents roughly a 135,000 reduction in homes on the market and a significant improvement from six months' supply in 2012. Keep in mind, this measure is based on current daily selling rate. The expected increase in home sales will likely translate directly to new home construction given the very lean inventories. With respect to inventory conditions, the signal for home builders to accelerate starts activity is in place. Homebuilders are also unlikely to significantly accelerate construction activity until stable or rising home prices material- ize. Existing home prices increased nearly 7 percent in 2012, are expected to end up more than 11 percent in 2013, and are pro- jected to increase nearly 6 percent in 2014. This is predicated on PCA's assessments regarding foreclosures, economic growth and accelerated sales activity. The Dodge Construction Outlook forecasts single family hous- ing to grow 26 percent in dollars, corresponding to a 24 percent increase in unit starts, to 785,000 (McGraw-Hill Construction basis). The positives for single family housing are numerous— the pace of foreclosures has eased, home prices are rising, and mortgage rates remain near recent lows. However, the demand for housing will continue to be restrained by careful bank lending practices, believes McGraw-Hill Construction's Robert Murray. "The 2014 picture bears some similarity to [what took] place during 2013, with single family housing providing much of the upward push; multifamily housing showing a slower yet still healthy rate of growth after four years of expansion, and commer- cial building gradually ascending from low levels," notes Murray. "One change that's expected for 2014 is that institutional build- ing will no longer be pulling down nonresidential building and total construction." Multifamily starts recorded a 40 percent gain in 2012, and are running at a 23 percent growth pace in 2013. PCA expects an additional growth of 13 percent in 2014 to 345,000 units. House- hold formation continues to strengthen while damaged credit due to foreclosure activity and tight mortgage lending standards have combined to create robust apartment demand. Furthermore, the U.S. population is aging and through the foreseeable future demand for multi-unit, assisted-living complexes and condomini- ums will increase further. Finally, many would-be entry-level home buyers are burdened with high student loan payments—delaying their entry into the single family market to the benefit of multifamily demand. This bright outlook for demand has reduced banks' perceived lending risk to multifamily investments resulting in greater access to cap- ital markets. The formula of strong demand conditions and easier access to capital leads to sustained gains in multifamily construc- tion throughout the forecast horizon. According to the Dodge Construction Outlook, multifamily housing will rise 11 percent in dollars and 9 percent in units. While growth continues, the percentage gains will be smaller than the previous four years, reflecting a maturing multifami- ly market, says the Dodge report. This structure type is still a favored investment target by the real estate finance community, which in the near term should lead to more high-rise residential buildings in major cities. Nonresidential Turnaround Nonresidential construction declined 45 percent during 2008- 2011. Amplified by severe intensity weakness, nonresidential cement consumption declined 75 percent during the same period. The nonresiden- tial sector has shown a solid recovery since 2011 and is expected to achieve sustained gains in both construction activity and cement intensities throughout the fore- cast horizon. These factors are expected to result in moderate-to-strong gains in cement consumption. Nonresidential cement consumption tracked at nearly a 22 percent year-over-year gain for 2013. PCA expects nonresidential cement consumption will increase near a 20 percent growth rate through 2016. Even with these strong growth rates, 2016 nonresidential cement consumption will remain roughly 17 percent below 2007 lev- els. About 25 percent of the anticipated growth in 2014 total cement consump- tion is expected to be the result of expect- ed gains in nonresidential construction. These gains will likely be driven by growth 38 • March 2014 VIP Show Guide U854.indd 38 2/14/14 12:11 PM

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