"The surge in housing starts was mainly weather-related," said David Seiders, National Association of Home Builders' chief economist. "Market fundamentals suggest that this pace of activity will be hard to sustain, and NAHB's survey of single-family builders points toward some cooling down in coming months, largely because of eroding affordability conditions."
Builders are understandably happy about the weather, but materials suppliers don't universally share the joy.
"Cement producers take advantage of the cold weather to build up inventories for the spring construction season," said Ed Sullivan, Philadelphia-based chief economist for the Portland Cement Association. "With the weather being so warm, inventories aren't rebuilding, so there's a potential for shortages this year."
Last year, national construction activity - residential, commercial and public - consumed 120 million tons of cement. About 19 tons of cement are used to build the typical 2,300-square-foot, single-family house, statistics from the home-builders' group show.
For the last couple of years, cement supplies have been tight in 30 states during peak building season, Sullivan said. Right now, 15 states are short of the product. There is no shortage in South Jersey, and Philadelphia has an adequate supply, but Western Pennsylvania does not, he said.
Some economists are suggesting that the anticipated decline in residential-construction activity will ease supply problems, but Sullivan doesn't buy it.
"There is emerging strength in the nonresidential segment, and since 50 percent of our demand is public-sector, that will increase as the public picture improves," he said.
The cement industry is increasing capacity slowly, with 14.5 million new tons, or a 15 percent expansion, due by 2010.
"There will be no immediate relief," he said.
