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Across nation, building materials in tight supply

Alan J. Heavens/The Philadelphia Inquirer

— Although home builders in many parts of the country are beginning to experience a decline in buyer demand, the shortage of some key building products is continuing.

Chief among the products in tight supply is cement. Although residential-construction starts may be lower now than during the boom of the last five years, increased demand from public and commercial building swallows more raw material than ever.

“U.S. cement plants are operating at maximum levels, as they did throughout 2004 and 2005,” said Ed Sullivan, the Philadelphia-based chief economist for the Portland Cement Association.



“Persistent low-cement inventories increase the vulnerability to demand surges or unexpected supply disruptions.”

Through the first quarter of 2006, cement imports increased nearly 40 percent over record 2005 levels, Sullivan said. Pennsylvania consumption is up 28 percent over 2005 levels year to date.



“Despite the industry’s efforts to ensure adequate near-term supply, cement consumption remains extremely strong,” he said.

Consumption of cement and other materials would be even greater if the Gulf of Mexico region were rebuilding from Hurricane Katrina at a faster pace, said Michael Carliner, an economist with the National Association of Home Builders (NAHB).

Lumber prices are much lower than at this time last year — a definite indication of a slowdown in residential construction.

Random Lengths of Eugene, Ore., which tracks prices of framing and panelized lumber (plywood and oriented strand board), has been reporting lower prices for both for several weeks.

Panelized-lumber prices are actually down about $100 per thousand board feet from the same period in 2005, and framing-lumber prices are lower by about $60 to $80 per thousand board feet.

Many factors are involved in lumber pricing, including the number of mills in operation at any given time.

But a recent Random Lengths report said that production was lower in the West, and that housing starts in both the United States and Canada have fallen this year, which has a definite impact on price.

As demand for lumber products drops, mills are taken out of operation, and that decline in supply will increase the price.

Carliner said that prices were definitely down from a peak in summer 2004, and that he expected the lumber supply this year to be adequate to meet residential-construction needs.

“Prices are down a little on our end,” said Gary G. Schaal, director of sales and marketing for Orleans Homebuilders in Bensalem, Pa., “and probably will fall more as the residential market slows further.”


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