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Aug. 20, 2004: Shortage Of Cement, Other Materials Threaten Housing Market

August 20, 2004
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WASHINGTON - A shortage of cement and other key building materials looms as the biggest threat to the growing housing market that has produced record levels of new home construction in the U.S., according to a recent survey conducted by the National Association of Home Builders (NAHB).

"A nationwide survey conducted in July shows that builders are reporting shortages of cement, gypsum wallboard, oriented strand board (OSB), steel framing, and insulating materials," said Jerry Howard, executive vice president and CEO of NAHB. "Rising wholesale prices of building materials have added $5,000 to $7,000 to the cost of building an average new home, and construction delays caused by supply shortages could translate into further cost increases. Left unchecked, these factors could result in serious disruptions to the housing market."

According to the NAHB, of most immediate concern is cement, with 41 percent of respondents citing a shortage of this building material. This is a huge jump from May, when 11 percent of those polled viewed this as an issue. In March, only 3 percent of builders reported that cement was in short supply.

To relieve the shortage, Howard called on the Bush administration to eliminate the high anti-dumping duties on imports of Mexican cement.

Shortages first appeared this spring in Florida, which imports about 40 percent of its cement, compared with a nationwide average of 20 percent. Supplies subsequently tightened in other regions partly because strong demand from China has diverted the amount of cement available from other countries and limited the number of cargo ships that can bring the product to U.S. ports.

NAHB says that high duties have severely limited supplies from Mexico, which is the most logical source of supplementary imports. A delivery from that country takes four days, compared to an average of 44 days for a cement shipment from Asia.

"With global shipping capacity strained, the ability to import cement from Asia and Europe to meet this shortfall has been significantly reduced," said Howard. "Therefore, it makes sense to rescind the costly anti-dumping duties on Mexican cement that are preventing a stable and reliable supply of imports to U.S. consumers."

Twenty-six percent of those surveyed reported experiencing a shortage of gypsum wallboard, up from 11 percent last October, 16 percent in March, and 19 percent in May.

Nearly one-third of respondents are experiencing shortages of oriented strand board and plywood, wood panel products used for wall sheathing, floors, and roofs. While this is a significant figure, it is well below the peak of 52 percent reported in last October's survey. However, prices of those products remain high.

Insulation material is another sore spot for builders, as 20 percent noted a lack of this product, compared to 10 percent just four months earlier.

Shortages of building materials have also led to rising costs. During the past six months, 90 percent of respondents reported paying higher prices for framing lumber and oriented strand board, 88 percent for plywood, 86 percent for cement, 80 percent for steel, 75 percent for gypsum wallboard, and 68 percent for insulation.

"A steady supply of building materials available at reasonable prices is important to maintaining a vibrant housing market and to meeting the growing demand for affordable housing," said Howard.

Publication date: 08/16/2004

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