Housing gains bode well for EWP, structural panels

tTt"t sMALL eur positive uptick in

I the economv and residential construction closedi0l2 on an optimistic note for the first time since the recession began, and that slow-but-steady growth is expected to continue through 2013. With indicators pointing to rising housing starts through the year and into 2014, APA-The Engineered Wood Association predicts a second straight year of growth in all four of the wood product sectors it represents.

"Last year saw across-the-board increases in structural panels, I-joists, glulam and LVL. ln2013, not only will that trend continue, but at a slightly faster pace in most cases," said Craig Adair, APA's market research director. "Residential construction will drive much of that growth, with pent-up demand for housing, moderately rising home prices, and growing consumer confidence having the most influence."

Residential Markets

Housing is beginning to lead the economy and is expected to provide an economic catalyst for years to come. The residential market is gaining strength from a very low bottom, and interest rates are still low. While housing is not immune from potential tax increases and government spending cuts, momentum is favorable for a healthy increase in starts.

APA is forecasting single-family housing starts to reach 665,000, a 24Vo gain, as homeowners take a positive view toward purchasing a home, the job market improves, and home prices fi rm up in many cities. Multifamily starts are expected to improve 35Vo to 330000 units.

The remodeling market is also showing small signs of life, although the outlook is brighter into the second half of 2013 and in years following. The NAHB's Remodeling Market Index is above 50 for the first time since 2005, meaning that more remodelers expect business to be higher or better in the future than lower.

The Harvard Joint Center for Housing Studies predicts repair and remodeling expenditures to reach 2007 levels, around $145 billion, a dramatic improvement over 200820l2levels.

Non-residential, Industrial, Exports

Non-residential's mild 37o lptick in starts in 2Ol2 is expected to be repeated in 2013. School construction and healthcare will lead in total square footage, although the education sector will experience a small decline. Collectively, non-residential starts are expected to recover to more than I billion sq. ft. within the next four years.

The industrial market will see only modest growth in 2013 due to a number of factors, from government bud- get cuts that impact manufacturing to the millwork industry's dependence on remodeling as well as non-residential construction. Overall, manufacturing is expected to grow about 27o this year, down from 47o in 2Ol2; improvement to 57o growth is anticipated in 2014.

Finally, indicators point to U.S. structural panel manufacturers exporting about the same quantity of material in 2013 as in 2012.

Expections for Woods

Wood products demand is expected to accelerate as rapid housing growth is followed by renewed repair and remodeling energy. an upturn in the non-residential construction cycle, and industrial demand that increases with consumer spending and higher GDP growth.

Domestic (U.S. and Canada) production of OSB and plywood is expected to reach 30.5 billion sq. ft. in 2Ol3 , a ljVo rise over 2012.

Glulam is predicted to see a lOTo increase over 2O12, reaching 248 million bd. ft. The growth is due entirely to housing, with little support from non-residential.

Growth in the I-joist market is forecast around l77o in 2013 to 651 million linear ft., slightly slower than 2012's 22Vo increase. Most of the gains will come from housing, with raised-floor construction continuing to provide a notable boost.

Increased housing starts also will drive demand for LVL, the majority of which is used for beams, headers and rimboard. LVL production should reach 54.9 million cubic ft. in 2013. a l0Vo growth over 2012.

Additional market details and historical data are contained in APA's 2013 Structural Panel & Engineered Wood Yearbook. The report is available for purchase for $250 and can be ordered through the association's website at www.apawood.org.