Aside from home builders and mortgage bankers, perhaps no businesses suffered from the housing downturn more than the building materials industry, particularly the big three sectors servicing residential construction: wood, cement, and drywall.
According to Continuum Advisory Group, a Cary, N.C.–based building industry consultancy, overall softwood (framing) lumber production in the U.S. fell 37 percent from 2005 to 2010 as the share of consumption by the residential construction sector declined from more than 50 percent to 30 percent. During that same period, more than 12 billion board feet of production—about 15 percent of capacity—was permanently removed from the market as mills were shuttered and forest lands idled. Sawmill employment fell from approximately 120,000 jobs in 2005 to slightly more than 80,000 in 2010. Overall, Labor Department data shows that employment in the wood products sector fell from approximately 560,000 in 2006 to a bit more than 360,000 in 2009, a drop of 35.5 percent.
In comparison, employment in residential building construction fell from slightly more than 1 million in 2006 to 639,000 in 2009, a decline of 36.6 percent, according to a December 2010 Bureau of Labor Statistics (BLS) analysis. Said that analysis, the BLS Employment Projections Program “estimates that demand for residential construction grew from supporting 5.5 million jobs, or 4.2 percent of all U.S. employment, in 1996, to 7.4 million jobs, or 5.1 percent of total employment, at the peak of the cycle in 2005. As the housing market crashed, residential construction–related employment fell substantially; it was at 4.5 million in 2008, accounting for only 3.0 percent of total U.S. jobs.”
U.S. production of cement, an essential component of all concrete and concrete products, fell from a peak of approximately 95 million metric tons in 2004–05 to a low of slightly more than 60 million in 2009, according to the Portland Cement Association (PCA). Labor Department data shows employment in the cement and concrete products sector declined from approximately 248,000 in 2006 to 188,000 in 2009, a drop of 24.4.
Drywall, or wallboard production capacity, fell from 40 billion square feet in 2004 and 2005 to 26.8 billion square feet in 2009 and 2010, Continuum reports. Production of crude gypsum, from which wallboard is made, fell from 18.6 million tons in 2006 to 8.84 million tons in 2010.
From 2010 to 2011, the moribund markets for the big three sectors began to stabilize and then rebound, even if the residential construction industry was still mired in the downturn.
By 2012, the metrics turned positive: Residential construction’s share of framing lumber increased to 37 percent, and its share of OSB consumption—which peaked at more than 70 percent in 2006—rose from a low of 47 percent in 2009 to 56 percent in 2012, according to Continuum. Gypsum sold or used rose from slightly more than 10 million metric tons in 2010 to roughly 14 million metric tons in 2012. Cement production, according to PCA, was up to 78.9 million metric tons in 2012, up from 60 million metric tons in 2009.
In 2013, residential construction ramped up, creating product shortages among two of the big three sectors. According to the NAHB, 22 percent of members reported shortages of OSB, 20 percent of gypsum wallboard, and 18 percent of framing lumber. But in 2014, the supply chain began to open up—reflecting what NAHB saw as the return of idled production capacity—and prices softened. Builders reporting shortages went down to 9 percent for OSB, 14 percent for wallboard, and 8 percent for framing lumber; 92 percent noted price declines for OSB and framing lumber from 2013 levels.