US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Recent Announcements Indicate Strong Demand for Building Materials

As 2021 comes to a close, the US building construction industry will look back with fondness as it considers its balance sheets. Despite supply chain issues that often caused shortages of raw materials and delayed shipments of finished products, participants across the US building construction industry – manufacturers, distributors, and contractors – generally experienced strong sales throughout 2021. Bolstered by continuing high demand for new housing and homeowner interest in renovation projects, demand for a number of building products was at an elevated level throughout the year. 

For many construction professionals, the question now is what will the market look like in 2022? A pair of recent announcements by leading building product manufacturers indicates that the market will remain strong going forward:

  • CertainTeed – a leading supplier of a wide range of building materials – announced plans to expand production of gypsum board, asphalt shingles, and insulation
  • Kohler – one of the largest suppliers of plumbing fixtures and fittings – announced plans to construct a new manufacturing plant in Arizona

These new and expanded production centers indicate the companies believe that the US construction market will remain bullish in 2022 (and beyond). With housing starts expected to remain at a high level going forward, this will boost demand for gypsum wallboard, asphalt shingles, and insulation – all of which are used extensively during the home construction process. Furthermore, home renovation activity is expected to remain strong in 2022, as homeowners continue to refurbish older homes or remodel residences to make them more suitable for post-coronavirus living, such as by adding or expanding rooms, remodeling kitchens and bathrooms, or converting little-used spaces into home offices and gyms. All of these projects will also spur demand for building materials.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Rising Prices Continue to Afflict Construction Market

Readers of this site will note that we regularly discuss lumber prices – namely, how their surge during the COVID-19 pandemic has affected many facets of the US construction industry, from helping to drive up new home prices to potentially altering or delaying home improvement projects. Now, a recent headline indicates that the problem is not just limited to lumber alone.

Prices of all construction materials – lumber, steel, drywall, fasteners, etc. – rose 1.5% in October, the highest such increase since June. Furthermore, in a year-over-year comparison, construction materials prices were more than 20% higher in October of 2021 than they were a year ago. Perhaps more worrisome for construction professionals, prices are expected to continue to climb throughout the rest of the year and into 2022.

While in many respects the construction market has weathered these prices – with new housing remaining strong and homeowner interest in home improvement projects undimmed – there is concern about the effect of high prices among contractors and other industry professionals. Indeed, with inflation affecting many other segments of the US economy – such as high gas prices and more costly groceries – some are wondering if further increases in prices will cause consumers to cancel home improvement projects. It can be difficult to sell homeowners on the value of a $25,000 kitchen renovation, for instance, if they are concerned about their ability to repay this debt. Freedonia experts will continue to monitor the price of construction materials – as well as other products – as the US economy contends with supply chain issues, such as the availability of raw materials and bottlenecks in production and transportation.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Latest Retail Sales Report Shows Uptick for Building Materials Distributors

The recent release of the October Retails Sales by the US Census Bureau showed that sales by retailers of building materials and garden equipment and supplies rose in October 2021 – a rebound after a decline in September. Compared to this time last year, retail sales in the category were up more than 13%.

A number of factors can explain this sales increase, key among them:

  • continuing strength in new home construction and homeowner interest in home improvement projects
  • rising lumber prices (after a period of declines) and price hikes for a number of other key building materials, such as fasteners and drywall
  • consumer interest in a last round of outdoor projects – such as preparing gardens and yards for the winter – that would necessitate the purchase of such items as leaf blowers and lawn and garden consumables
  • strong sales of Halloween-related decorations – after trick-or-treating was canceled last year due to the COVID-19 pandemic, many consumers opted to create more extensive outdoor displays to celebrate the holiday

The November retail sales report – which includes Black Friday sales and the beginnings of Christmas shopping – will reveal whether or not building materials and garden equipment suppliers and retailers will be able to continue to post strong sales, or if concerns about inflation will cause shoppers to cut back on their holiday purchases in favor of basic household staples. TFG analysts will continue to monitor retail sales – as well as numerous other indicators – to gauge their effects on the US economy going forward.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Latest Asphalt Roofing Production Report Shows Continuing Effect of COVID-19 Pandemic

The recent Quarterly Production Report of the Asphalt Roofing Manufacturers Association contained both good and bad news for those wondering if the US construction industry was escaping the challenges of the COVID-19 pandemic.

The good news: shipments of asphalt shingles and polymer-modified bituminous membranes rose at a double-digit pace in the third quarter of 2021, boosted by continuing high levels of new housing activity and strong homeowner interest in completing home improvement projects, such as replacing older or worn roofs. This strong demand is good news for the construction industry and the US economy as a whole, as a tight housing market and consumer willingness to spend on fixing and renovating homes means that many have the means (and desire) to buy or remodel their homes – and will continue to do so going forward.

The bad news: compared to last year, shipments of asphalt shingles and bituminous membranes declined in the third quarter of 2021, a contrast from the increases seen in the second quarter. Manufacturers attributed this decline in production due to supply chain issues in obtaining key raw materials, such as asphalt, fiberglass matting (used as the base for many shingles and membranes), and ceramic and mineral granules used to coat these products. Furthermore, the cost of these products has risen – and will continue to do so – forcing manufacturers to pass on these costs to consumers. At a time when so many other prices are rising, continuing price hikes may cause some homeowners to delay reroofing projects or cause potential home buyers to put off home purchases until they become more affordable.

Freedonia experts will continue to monitor the roofing industry, as well the US construction sector as a whole, as it contends with supply chain issues, such as the availability of raw materials and bottlenecks in production and transportation.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of Roofing studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Rising Lumber Prices; Again a Challenge to Construction Industry?

Over the past year and a half, the US building construction industry has been buffeted by a wide range of issues – COVID-19, shortages of labor and raw materials, and surging prices for materials when available. For many in the construction industry, high lumber prices were perhaps the most pressing issue. Given the ubiquity of lumber in construction jobs – from building decks to making structural framing – high lumber prices bedeviled builders, contractors, and consumers for most of the second half of 2020 and the first half of 2021 before prices returned to their pre-pandemic norms.

Now, however, lumber prices have started to rise again, causing angst among the construction industry. While prices – about $700 per thousand board feet – are far below the $1,700 peak seen last year, their rise – at a time when inflation is affecting so many other items (such as gasoline, fasteners, and other building components) – is a concern:

  • A prolonged surge in lumber prices may negatively affect home prices at a time when there is a shortage of affordable housing.
  • Consumers buffeted by rising prices for a wide range of consumer goods may cancel previously planned home improvement projects.
  • Contractors may sacrifice profitability to keep getting bids – a strategy that only works in the short term!

Some feel that this increase in lumber prices in a temporary blip – the onset of winter will bring a reduction in many construction jobs, allowing supplies to increase and prices to fall. Others, though, are concerned that this increase is a harbinger of another round of prices. Freedonia analysts will continue to monitor lumber prices and their effects on the construction industry as a whole.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.