In its most recent Economic Research report, Portland Cement Association tracks housing start activity at 36 percent below 2007 levels, marking a third
In its most recent Economic Research report, Portland Cement Association tracks housing start activity at 36 percent below 2007 levels, marking a third consecutive year of decline in a building segment representing in some years upward of 30 percent of net cement and concrete consumption. Weak economic conditions, tight credit conditions, and tepid sales are causing huge housing inventory overhangs that must be cleaned up before market segment recovery begins, the report notes.
PCA projects an additional one percent housing start decline in 2009, followed by market segment recovery in 2010, excepting perhaps housing boom-centered Arizona, California, Florida and Nevada, which might continue to see a disproportionately high number of mortgage foreclosures and defaults. Despite large home price declines and improved affordability, sales remain sluggish and offer little hope the inventory glut will be worked off anytime soon, says PCA Chief Economist Ed Sullivan. The economic environment remains weak, he adds, dragged down by high energy costs and soft employment fundamentals.
Sullivan says current home inventories stand at a 10.5-month supply, more than double the five-month level that normally accelerates housing start activity. Continual cutbacks in starts and marginal gains in sales are expected to be more than offset by increases in foreclosed properties joining the market inventory in 2008 and 2009.