Rock Products

FEB 2018

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64 • ROCK products • February 2018 ECONOMICS and 4.82 percent in 2019. NAHB is projecting 1.21 million total housing starts in 2017 and expects over- all production to grow an additional 2.7 percent this year to 1.25 million units. Single-family starts are expected to rise 5 percent in 2018 to 893,000 units and increase an additional 5 percent to 940,000 next year. Setting the 2000-2003 period as a benchmark for normal single-family housing activity when single-family production averaged 1.3 million units annually, single-family starts are expected to gradually rise from 63 percent of what is considered a typi- cal market in the third quarter of 2017 to 73 percent of normal by the fourth quarter of 2019. On the multifamily side, NAHB is expecting multifamily starts to edge 1.6 percent lower this year to 354,000 units from a projected 360,000 total in 2017. This is a sustainable level due to demographics and the balance between supply and demand. Meanwhile home remodeling is posting strong market conditions, due in part to strong demand in the wake of the ter- rible hurricane and wildfire season in 2017. Residential remodeling activity is expected to register a 7 percent gain in 2018 over last year. Healthy Housing Markets Delving beneath the national numbers, David Berson, senior vice president and chief economist, Nationwide Insurance, said the vast majority of local housing markets are healthy and faring well. Berson lists 324 markets as positive, 69 as neutral and just seven as negative. While job gains, household formations and mortgage markets still look good, he noted that rapid price increases are concerning. Comparing current conditions with the housing boom a decade ago, Berson noted that the market is supply con- strained today, but wasn't during the boom. And mortgage credit, while more readily available than just a few years ago, remains far limited relative to the market peak in 2007. While he anticipates a slightly more rapid rise in mortgage interest rates this year, Berson said it should not hurt housing activity. "Mortgage rates are expected to rise from 4 percent to 4.5 percent by the end of year," he said. "However, hous- ing demand remains strong and wages are solid, and this will more than offset the negative effects from rising rates." Home Prices Up CoreLogic Chief Economist Frank Nothaft also expects mortgage interest rates and home prices to post moder- ate increases in 2018, which in turn will lessen housing affordability. Like Berson, Nothaft expects that the benchmark 30-year fixed-rate mort- gage will average 4.5 percent by the end of the year. "Higher rates are not just a gradual erosion of affordability, but also impact owner mobility," said Nothaft. "That has implications on the overall inventory for sale. Supply has been tight and for-sale inventory will continue to remain tight." The ongoing tight inventory in the housing market will cause home and rent price growth to outpace inflation, he added, with nationwide home prices rising an average 5 percent and rental prices posting a 3 percent increase. The biggest growth for new home sales are occurring in the South and West, where many of these metro areas have good job growth, good affordability and good weather. Nothaft listed Houston, Dallas, San Antonio, Austin, Phoenix, Atlanta and Charlotte as the top seven major markets in terms of new home sales. Meanwhile, he reported that overall mortgage delinquency and foreclosure rates are at their lowest levels in more than a decade, but that is a different story for markets pummeled by last year's devastating hurricanes. "Houston's delinquencies almost dou- bled year-over-year and that is due almost entirely to Hurricane Harvey," said Nothaft. Great Lakes Limestone Shipments Shipments of limestone on the Great Lakes totaled 28 million tons in 2017, an increase of 6.4 percent compared to 2016, according to the Lake Carriers' Association (LCA). The 2017 loadings were also 2.1 percent above the trade's five-year average. Loadings from U.S. quarries totaled 23.2 million tons, an increase of 8.4 percent compared to 2016. Shipments from U.S. quarries also inched passed their five- year average. Shipments from Canadian quarries totaled 4.85 million tons, a decrease of 2.1 percent from 2016, but 10.4 percent better than their five-year average. LCA represents the U.S.-flag Great Lakes fleet, which can annually move more than 90 million tons of cargos that are the foundation of American manufacturing, power generation, and construction: iron ore, limestone, coal, cement and other dry bulk materials such as grain and sand. Construction Employment Forty states added construction jobs between November 2016 and Novem- ber 2017, while 39 states added construction jobs between October and November, according to an analysis by the Associated General Contractors of America of Labor Department data. Association officials noted that firms in most states are adding jobs amid expectations that demand will continue to grow thanks to new tax cuts and reg- ulatory reforms. California added the most construction jobs (48,400 jobs, 6.2 percent) during the past year. Other states adding a high number of new construction jobs for the past 12 months include Flor - ida (41,800 jobs, 8.7 percent); Texas (23,900 jobs, 3.4 percent); New York (12,600 jobs, 3.4 percent) and Penn- sylvania (12,000 jobs, 4.6 percent). Nevada (13.8 percent, 10,900 jobs) added the highest percentage of new construction jobs during the past year, followed by Rhode Island (13 percent, 2,400 jobs); New Hampshire (10 percent, 2,600 jobs); Oregon (9.7 percent, 9,100 jobs) and Florida.

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