Aggregates; Construction Markets Rising Higher

As debate over a new highway bill and an increase in gas taxes to support the highway trust fund heat up in Congress, both the aggregates and construction markets started off the summer with bang. The estimated U.S. output of construction aggregates produced and shipped for consumption in the first quarter of 2014 was 370 metric tons (Mt,) an increase of 7 percent compared with that of the same period of 2013, according to the U.S. Geological Survey. “The revised estimated annual output produced for consumption in 2013 was 2.03 billion metric tons (Gt,) still a slight increase compared with the reported annual output for 2012,” said Construction Aggregates Commodity Specialist Jason Willett.

An estimated 222 million Mt of crushed stone was produced and shipped for consumption in the United States in the first quarter of 2014, an increase of 5 percent compared with that of the same period of 2013. The estimated annual output produced for consumption in 2013 was 1.19 Gt, a slight increase compared with the reported annual output for 2012.

The estimated U.S. output of construction sand and gravel produced and shipped for consumption in the first quarter of 2014 was 149 Mt, an increase of 10 percent compared with that of the same period of 2013. The revised estimated annual output produced for consumption in 2013 was 847 Mt, an increase of 4 percent compared with the reported annual output for 2012. The estimated portland cement consumption increased by 3 percent in the first quarter of 2014 compared with that of the first quarter of 2013 and increased by 4 percent for 2013 compared with annual consumption in 2012. This information is obtained from the USGS monthly survey of U.S. cement producers.

The estimated production-for-consumption of construction aggregates in the first quarter of 2014 increased in six of the nine geographic divisions compared with that sold or used in the first quarter of 2013. The largest increases were recorded in the Mountain and Pacific divisions.

Production-for-consumption increased in 23 of the 43 states that were estimated. The five leading states were, in descending order of production-for- consumption, Texas, California, Florida, Missouri and Washington. Their combined total production-for-consumption was 133 Mt and increased 17 percent when compared with that of the same period of 2013.

The estimated production-for-consumption of crushed stone in the first quarter of 2014 increased in six of the nine geographic divisions compared with that sold or used in the first quarter of 2013. The largest increases were recorded in the Mountain and New England divisions.

Production-for- consumption increased in 24 of the 46 states that were estimated. The five leading states were, in descending order of production-for-consumption, Texas, Florida, Missouri, Oklahoma and Pennsylvania. Their combined total production- for-consumption was 85.5 Mt and represented an increase of 8 percent compared with that in the first quarter of 2013.

The estimated production-for-consumption of construction sand and gravel in the first quarter of 2014 increased from first quarter 2013 levels in seven of the nine geographic divisions. The largest increases in percentages were recorded in the Pacific and Mountain divisions.

Production-for-consumption increased in 26 of the 46 states that were estimated. The five leading states were, in descending order of production-for-consumption, Texas, California, Washington, Arizona and Colorado. Their combined total production-for-consumption was 63.9 Mt, an increase of 21 percent compared with that in the first quarter of 2013.

Construction Spending
The U.S. Census Bureau of the Department of Commerce announced that construction spending during April 2014 was estimated at a seasonally adjusted annual rate of $953.5 billion, 0.2 percent (±1.5 percent) above the revised March estimate of $951.6 billion. The April figure is 8.6 percent (±2.0 percent) above the April 2013 estimate of $878.4 billion.

During the first 4 months of this year, construction spending amounted to $274.5 billion, 8.9 percent (±1.5 percent) above the $252.1 billion for the same period in 2013.

In April, the estimated seasonally adjusted annual rate of public construction spending was $267.0 billion, 0.8 percent (±2.8 percent) above the revised March estimate of $264.8 billion.

Highway construction was at a seasonally adjusted annual rate of $81.3 billion, 1.1 percent (±8.1 percent) below the revised March estimate of $82.2 billion. Educational construction was at a seasonally adjusted annual rate of $62.6 billion, 3.0 percent (±4.4 percent) above the revised March estimate of $60.8 billion

Spending on private construction was at a seasonally adjusted annual rate of $686.5 billion, nearly the same as (±1.2 percent) the revised March estimate of $686.8billion. Residential construction was at a seasonally adjusted annual rate of $378.5 billion in April, 0.1 percent (±1.3 percent) above the revised March estimate of $378.3billion.

Nonresidential construction was at a seasonally adjusted annual rate of $308.0 billion in April, 0.1 percent (±1.2 percent) below the revised March estimate of $308.5 billion.

New Home Sales Rise Again
Sales of newly built, single-family homes rose 6.4 percent to a seasonally adjusted annual rate of 433,000 units in April, according to newly released data from HUD and the U.S. Census Bureau. The gain builds on an upward revision of sales numbers reported for the previous month.

“Builders are gradually increasing sales, but tight credit conditions, particularly for first-time home buyers, are impeding a more robust recovery,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Del.

“In a positive development, builders are adding inventory in anticipation of a further release of pent-up demand,” said NAHB Chief Economist David Crowe. “We are only about half-way back to what could be considered a normal market, but relatively low mortgage rates and affordable home prices are other factors that should help keep starts and sales on a slow upward trajectory in the months ahead.”

On a regional basis, new-home sales rose 47.4 percent in the Midwest and 3.1 percent in the South and held steady in the West. The Northeast posted a 26.7 percent decline. The inventory of new homes for sale increased to 192,000 units in April. This is a 5.3-month supply at the current sales pace.

Housing Markets Thriving
Of the approximately 350 metro markets nationwide, 56 returned to or exceeded their last normal levels of economic and housing activity, according to the National Association of Home Builders/First American Leading Markets Index (LMI), released today. This represents a net gain of nine metros year over year.

The index’s nationwide score of .88 held steady from the previous month. This means that based on current permit, price and employment data, the nationwide average is running at 88 percent of normal economic and housing activity. Meanwhile, 30 percent of metro areas saw their score rise this month and 83 percent have shown an improvement over the past year.

“Markets are gradually returning to normal levels of housing and economic activity,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. “When we see more sustainable levels of job growth, this will unleash pent-up demand and bring more buyers into the marketplace.”

Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.4 – or 40 percent better than its last normal market level. Other major metros at the top of the list include Honolulu; Oklahoma City; Austin, Texas, and Houston. Rounding out the top 10 are Los Angeles; San Jose, Calif.; Harrisburg, Pa.; Pittsburgh and Salt Lake City – all of whose LMI scores indicate that their market activity now equals or exceeds previous norms.

“Of the three components in the LMI, the one lagging is single-family housing permits, which is only 43 percent of the way back to normal while home prices are 26 percent above their last normal level and employment is at 95 percent of its previous norm,” said NAHB Chief Economist David Crowe. “In the 22 metros where permits are at or above normal, the overall index indicates that these markets have fully recovered.”

“Well over one-third of all markets are operating at a level of at least 90 percent of previous norms, and this bodes well for a continuing housing recovery in the year ahead,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report. Looking at smaller metros, both Odessa and Midland, Texas, boast LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession. Also at the top of the list of smaller metros are Bismarck, N.D.; Casper, Wyo.; and Grand Forks, N.D., respectively.

The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of economic and housing activity. More than 350 metro areas are scored by taking their average permit, price and employment levels for the past 12 months and dividing each by their annual average over the last period of normal growth.

For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison. The three components are then averaged to provide an overall score for each market; a national score is calculated based on national measures of the three metrics.

An index value above one indicates that a market has advanced beyond its previous normal level of economic activity.

Regards,

Mark Kuhar, Editor
[email protected]
Twitter: @EditorMarkKuhar
Rock Products Magazine
Mining Media International
Member: Construction Writers Association

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