Thanks to strong residential construction activity and improved home improvement spending, price increases among certain U.S. building materials companies may help strengthen this sector's recovery, according to Fitch Ratings in a new report.
Additionally, volume trends are also starting to show positive comparisons for a number of building products.
"Though price increases are taking place with more frequency for certain building materials, customers may become more resistant if demand remains lackluster and energy and raw material costs do not meaningfully inflate further," said Director Robert Rulla.
Commercial construction activity remained weak during the period. Volume trends were positive for aggregates producers and cement manufacturers, while shipments for gypsum wallboard were slightly lower during the second quarter of 2010 compared to the same period last year.
Volume comparisons may be uneven for building products in the coming quarters as demand varies across construction end-markets. Building materials directed to public infrastructure spending are likely to see continued moderately higher shipments due in part to stimulus-funded projects.
Conversely, the second-quarter momentum of building products in residential construction may stall somewhat in the third quarter.
"There has been a noticeable drop in new and existing home sales activity since the expiration of the federal housing tax credit," Rulla said.
"Weak commercial construction activity will also result in lower volumes for materials directed to this sector."
