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Construction Trends

Architecture Billings Index Continues to Improve at a Healthy Pace





With increasing demand for design services, the Architecture Billings Index is continuing to strengthen. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to 12 month lag time between architecture billings and construction spending. The American Institute of Architects reported the February ABI score was 54.9, up slightly from a mark of 54.2 in January. This score reflects a strong increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 64.8, higher than the reading of 63.2 the previous month – and its highest mark since January 2007.




“Conditions have been strengthening in all regions and construction sectors for the last several months,” said AIA Chief Economist Kermit Baker, Ph.D., Hon. AIA. “Still, we also continue to hear a mix of business conditions in the marketplace as this hesitant recovery continues to unfold.”




Key February ABI highlights include the following:
• Regional averages: Northeast (56.7), Midwest (54.7), West (54.7), South (52.7).




• Sector index breakdown: multi-family residential (60.9), mixed practice (56.9), commercial/industrial (53.3), institutional (50.7).




• Project inquiries index: 64.8.




The regional and sector categories are calculated as a three-month moving average, whereas the index and inquiries are monthly numbers.




Housing Starts Rise on Strength in Multifamily in March


Soaring production of multifamily apartments pushed nationwide housing starts beyond the million-unit mark for the first time since 2008 in March, according to figures released April 16 by HUD and the U.S. Census Bureau. The data show that total starts activity rose 7.0 percent for the month due entirely to a 31.1 percent increase on the multifamily side, while single-family production slipped 4.8 percent from a number that was revised strongly upward for the previous month.




“Today’s report is a reflection of the solid demand that many areas are seeing for rental apartments as young people take that first step into the housing market, which is a very positive development,” noted Rick Judson, chairman of the National Association of Home Builders and a home builder from Charlotte, N.C. “The numbers are also in keeping with our latest surveys that show single-family builders are experiencing some difficulties in keeping up with rising demand for new homes due to increasing construction costs and other factors.”




Calling the latest data a “mixed bag” due to the opposite direction of single- and multifamily starts and a somewhat weaker amount of permit issuance, NAHB Chief Economist David Crowe said that nevertheless, the numbers indicate “a continuation of the slow, methodical march forward” that characterizes the housing recovery. He also noted that “The three-month moving average for single-family starts remained unchanged at 628,000 units in March, which is right on pace with NAHB’s forecast for a 25 percent gain in new-home production in 2013.”




While single-family starts declined 4.8 percent to a seasonally adjusted annual rate of 619,000 units in March, this was entirely due to a substantial upward revision to the previous month’s data, without which virtually no change would have been recorded. At the same time, multifamily housing starts surged 31.1 percent to a seasonally adjusted annual rate of 417,000 units—their fastest pace since January 2006.




Three out of four regions posted gains in combined single- and multifamily housing production in March, with the Midwest registering a 9.6 percent increase, the South posting a 10.9 percent gain and the West noting a 2.7 percent rise. The Northeast was the lone exception to the rule, with a 5.8 percent decline.




Following a large gain in the previous month, total permit issuance fell 3.9 percent to a 902,000-unit rate in March. That decline reflected a 0.5 percent reduction to 595,000 units on the single-family side and a 10 percent reduction to 307,000 units on the multifamily side.




In contrast to the regional starts report, the Northeast was the only part of the country to post a gain in permitting activity in March, with a 24.7 percent increase to 101,000 units. Meanwhile, the Midwest, South and West posted declines of 2.1 percent, 6.2 percent and 10.4 percent, respectively.




Number of Improving Housing Markets Holds Steady in April


Following seven consecutive months of gains, the list of improving U.S. housing markets remained virtually unchanged in April, with 273 metros on the National Association of Home Builders/First American Improving Markets Index, released April 4. This total reflects a net reduction of one market since March and again includes entrants from all 50 states and the District of Columbia.




The IMI identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. Five new markets were added to the list and six markets were dropped from it in April. Newcomers included the geographically diverse locations of Macon, Ga.; Portland, Maine; Rocky Mount, N.C.; Eugene, Ore.; and Jackson, Tenn.




“The stability in the improving markets list this month is encouraging, with three quarters of all metros tracked by our index considered on the upswing as the housing recovery spreads to parts of every state,” said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. “In some markets, the main thing that’s holding back a recovery is a relatively thin inventory of homes for sale, which could be resolved if builders had easier access to credit for building homes and putting people back to work.”




“After a strong run-up through late 2012 and early 2013, the number of improving markets is holding steady at a high level,” said NAHB Chief Economist David Crowe. “We can expect to see more gradual gains going forward as challenges related to increased demand kick in—including everything from tightened supplies of developable lots and labor to the rising cost of building materials.”




“With 75 percent of the country seeing measurable improvement in housing market conditions, the outlook is definitely brightening for local economies this spring,” noted Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.




The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metro area must see improvement in all three measures for at least six consecutive months following those measures’ respective troughs before being included on the improving markets list.





A complete list of all 273 metropolitan areas currently on the IMI, and separate breakouts of metros newly added to or dropped from the list in April, is available at www.nahb.org/imi.




Rising Costs Put Squeeze on Builder Confidence in April


Facing increasing costs for building materials and rising concerns about the supply of developed lots and labor, builders registered less confidence in the market for newly built, single-family homes in April, with a two-point drop to 42 on the National Association of Home Builders/Wells Fargo Housing Market Index, released April 15.




“Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values,” said Rick Judson, National Association of Home Builders chairman and a home builder from Charlotte, N.C. “While sales conditions are generally improving, these challenges are holding back new building and job creation.”




“Supply chains for building materials, developed lots and skilled workers will take some time to re-establish themselves following the recession, and in the meantime builders are feeling squeezed by higher costs and limited availability issues,” explained NAHB Chief Economist David Crowe. “That said, builders’ outlook for the next six months has improved due to the low inventory of for-sale homes, rock bottom mortgage rates and rising consumer confidence.”




Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.




While the HMI component gauging current sales conditions declined two points to 45 and the component gauging buyer traffic declined four points to 30 in April, the component gauging sales expectations in the next six months posted a three-point gain to 53—its highest level since February 2007.




Looking at three-month moving averages for regional HMI scores, the Northeast was unchanged at 38 in April while the Midwest registered a two-point decline to 45, the South registered a four-point decline to 42 and the West posted a three-point decline to 55.




WOLF’s April Key Buyer Index Reflects Traditional Spring Building Trend


WOLF, the largest supplier of kitchen cabinets in the United States and a leading provider of building products in 28 states along the East Coast, has reported that the WOLF Key Buyer Index for April shows a healthy increase over the March score.




The April KBI score of 73.67 reflects a substantial increase from the March KBI of 66.67, and the highest KBI score recorded in nearly a year. This increase suggests that building materials buyers at selected independent LBM dealers in the Eastern United States have become even more optimistic about the residential construction industry in that region.




WOLF developed KBI, a proprietary metric that offers a monthly snapshot of independent dealers’ sentiments, to provide a concrete measure of how building materials buyers see the near-term future of their industry. WOLF gathers data for the KBI from a monthly survey of key buyers at independent building materials dealers across 21 states. A WOLF KBI score of 50 reflects a neutral outlook; a score above 50 reflects a positive outlook; and a score below 50 reflects a negative outlook.




WOLF buyers showed equal optimism in both the kitchen and building product segments, which had each already risen to a score of 66.67 in March. The building product KBI jumped to a robust 75.93, while the kitchen product KBI rose to 72.40. These increases reflect an average jump of more than 20 points from just three months ago.




The arrival of spring usually signals a return of residential construction activity. This seasonal upsurge is usually more pronounced in the exterior building product categories than in the kitchen and bath product category, which tends to produce much steadier demand throughout the year. The substantial rise in April’s KBI also signals buyers’ optimism about the overall state of the housing economy.




See the latest KBI score at www.wolfleader.com.




U.S. Demand for Adhesives and Sealants to Reach 9.8 Billion Pounds in 2017


U.S. demand for adhesives and sealants will rise 2.2 percent per year to 9.8 billion pounds in 2017, valued at $11.9 billion. Gains will be driven by an improved outlook for major adhesives and sealants markets such as paper packaging, motor vehicles, and building construction, following the recession-plagued 2007–2012 period. Demand will also benefit from trends toward greater use of adhesive bonding compared to alternative joining technologies, such as mechanical fasteners, in product assembly applications. However, advances will be limited by trends toward high solids formulations and lower application weights, which will reduce the total volume of adhesives and sealants consumed, and by market maturity and sluggish growth in a number of key applications. These and other trends are presented in “Adhesives & Sealants,” a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.




Natural adhesives and sealants will remain the largest product type through 2017, accounting for nearly 40 percent of demand by weight. However, natural products will also see the weakest gains going forward as the bulk of demand consists of low value starch adhesives used in corrugated cardboard production, a highly mature and slow growing application. The most rapid advances are expected for reactive adhesives and sealants, fueled by the rebounding manufacturing market, as well as by product substitution trends toward higher value materials. Hot melts will also see healthy gains, as their amenability to fast processing speeds will promote opportunities in the packaging market, while their lack of volatile organic compound emissions will continue to make hot melts an environmentally preferable option.




Despite decades of losing share to alternative formulations, solvent-based adhesives and sealants will see above average increases in demand, bolstered by a turnaround in the construction sector and product reformulation efforts to lower VOC emissions. More moderate gains for emulsion and dispersion adhesives and sealants will stem from market maturity and competition from hot melts in leading outlets such as case and carton sealing. However, ongoing development of better performing water-based formulations will allow emulsion adhesives and sealants to penetrate new markets going forward.




ConsensusDocs Releases a New Teaming Agreement


The newly released ConsensusDocs 498 Design-Build Teaming Agreement provides a standard contract for parties desiring to form a team for the purpose of submitting a bid on a design-build project.




This agreement has the flexibility for those team members to include design professionals, contractors and other parties. One team member serves the role as team leader for the purposes of compiling and submitting the proposal, as well as for negotiation of the owner agreement, if awarded. Critical issues such as confidentiality, withdrawal from the team, and document ownership are included. Post-award considerations are addressed and team members are required to enter good faith negotiations for a subsequent agreement covering the work (e.g., the ConsensusDocs 298 Joint Venture Agreement or the 299 Joint Venture LLC Operating Agreement).




The contract is specifically drafted to address the unique considerations of a design-build teaming arrangement. The newly published agreement furthers the coalition’s goal of writing fairer contracts to deliver better project results with less litigation. Similar to all ConsensusDocs standard contract documents, this agreement takes a project-first approach and promotes collaboration, communication and integration.





For more information, visit www.consensusdocs.org.




USGBC Report Calls for Examination of America’s School Facilities


The Center for Green Schools at the U.S. Green Building Council has released its first “State of Our Schools” report, highlighting the critical need to modernize school facilities to meet current health, safety and educational standards.




The report, featuring a foreword by former President Bill Clinton, states that schools are currently facing a $271 billion deferred maintenance bill just to bring the buildings up to working order—approximately $5,450 per student.




The last comprehensive report on America’s school facilities was conducted by the Government Accountability Office in 1995 and indicated that 15,000 U.S. schools were circulating air that at the time was deemed unfit to breathe. The USGBC report calls on the GAO to conduct an updated survey on the condition of America’s schools in order to paint a more complete picture of the scale and scope of today’s needs. The USGBC report also estimates that the cost to both bring schools into good repair and address modernization needs is $542 billion over the next 10 years for Pre-K–12 school buildings.




The Center for Green Schools at USGBC is urging the GAO to commission another survey on the condition of America’s schools, with support from 24 organizations, including the 21st Century School Fund, the American Federation of Teachers, the American Lung Association, the National Education Association and the National PTA, among others.




Go to centerforgreenschools.org/stateofschools to download the full report.




DBIA Hosts Second Annual Design-Build Student Competition


The Design-Build Institute of America, through collaboration between the organization’s 14 regions and national headquarters, will put students to the test with a unique competition that will provide hands-on experience in what DBIA calls “design-build done right.”




Last year, 27 teams responded to the initial Request for Qualifications issued in September, which focused on a hypothetical performing arts center on a college campus. Three teams were shortlisted to proceed to Phase 2, with one week to respond in full to the RFP. On Nov. 8, during the 2012 Design-Build Conference and Expo, these teams appeared before the national jury for 45-minute oral presentation/interviews, with Affinity Constructors of Washington State University prevailing as the DBIA’s inaugural Student Competition champions.




As was the case in 2012, this years’ competition will also take place in two phases, with an initial RFQ being issued to all registered teams Sept. 23, 2013. The three most qualified teams will be shortlisted and will receive the RFP. The winner selected during the Design-Build Conference and Expo in Las Vegas, Nev., Nov. 4-6.




Registration will be accepted from May 1 through Sept. 9, 2013. Only registered teams will receive the RFQ on Sept. 23, 2013. More information, including additional schedule milestones and student competition region structure, is available at http://www.dbia.org/about/studentcompetition/. To allow students to form the most competitive teams, pre-solicitation information, including presumed budget and program elements, is also posted.




This year, teams are asked to submit qualifications for a residence hall on a college campus in the United States. The residence hall will also house a Student Residential Academic Program and dining hall. The residence hall will be used during the summer months for various conferences and athletic summer camps. Facilities, programs and partnerships of faculty, staff and students need to be committed to supporting this living-learning environment. This will allow the further development of the SRAC, while also allowing a greater number of students to affordably live in close proximity to campus, which is a benefit to all academic programs on campus. The complete project scope and budget is being finalized and will be presented with the RFQ on Sept. 23, 2013.




ALI Announces Upgrades to Ladder Safety Training Platform and Availability of Training Modules in Spanish


The American Ladder Institute, Chicago, has completed significant enhancements to its free online Ladder Safety Training platform, including increased accessibility on mobile devices, the availability of all training modules in Spanish, and better tools for managers.




ALI’s Ladder Safety Training website, www.laddersafetytraining.org, has been upgraded to make its free training modules available using a range of devices and operating systems. The site’s new responsive design supports the play and control of training videos, tests and other features using modern Internet browsers, as well as on popular mobile and tablet platforms including Android and Apple iOS.




As a major part of the laddersafetytraining.org upgrade, the entire website’s contents, including all training videos and tests, are now available in Spanish. Spanish-speaking ladder-users can visit the site and click on the “Español” button in the top right corner to view the site and the complete training library in Spanish.




The new Ladder Safety Training platform also includes tools that help managers share training modules with employees. Managers can easily add users from within their company, track their progress on each module and access certificates earned by each trainee.




With these upgrades, all ALI Ladder Safety Training modules can now be easily viewed, shared and followed by managers and employees in a variety of workplace and non-work settings. The modules can be accessed for free online or purchased on DVD through laddersafetytraining.org.
Build Your Future Announces October as Careers in Construction Month
A key aspect of the Build Your Future initiative’s mission is to show potential industry recruits the rewarding career opportunities available in construction. Due to the tremendous response from BYF supporters and other organizations that have recognized and supported Careers in Construction Week, BYF is expanding its efforts to spread the word about construction careers by naming October 2013 “Careers in Construction Month.” (Build Your Future is a program of the National Center for Construction Education and Research.)




The goal in expanding this influential effort to promote construction careers is to increase flexibility and planning opportunities for organizations interested in supporting the industry’s critical need for skilled craft professionals through construction career events. Like its predecessor, Careers in Construction Month encourages local schools, contractors and organizations to partner locally to host construction career events and programs.




Educators, employers and industry associations are also encouraged to write their legislators and governors to support official state proclamations recognizing the month of October as Careers in Construction Month.




BYF provides a number of online resources for organizations interested in getting involved in Careers in Construction Month at byf.org/resources, including a best practices guide, craft profession posters, flyers and brochures. By registering your event on BYF’s website, byf.org/register, your event will be profiled as an official part of Careers in Construction Month for added publicity. In addition, visit the BYF resources page often, as more Careers in Construction Month resources will be added throughout the year.




People in the News


Steve Couling, managing director of TIME-Versalift, was elected as the new president of the International Powered Access Federation at the IPAF annual general meeting held in March. He succeeds Wayne Lawson of JLG.




Andy Studdert, chairman & CEO of NES Rentals, was elected deputy president. Two new members were elected to the IPAF board of directors: Brad Boehler, president of Skyjack, and Nick Selley, group business development director of AFI-Uplift.





Grabber Construction Products, Inc. has appointed Robert F. Rugg to Grabber’s board of directors as an outside director.




Rugg currently serves as vice president of strategic accounts at James Hardie Building Products, where he is actively involved in both the development and implementation of growth strategies with key partners. Prior to Rugg’s return to James Hardie in 2010 he previously held the positions of president of James Hardie Gypsum and executive vice president of James Hardie Industries, NV. Rugg was the president of gypsum at ProBuild Holdings in Denver and executive director of The Drake Group LLC. His career also included significant responsibilities with United States Gypsum Company in various positions including a member of the Corporate Strategy Development Counsel.




Companies in the News


On Center Software announces a new partnership with ClarkDietrich Building Systems that makes ClarkDietrich’s steel framing construction products available for immediate access by contractors with the On Center Software Quick Bid® estimating software.





Johns Manville has published its 2012 Sustainability Report, “We Build Environments.” The publication can be viewed in two formats (PDF and e-zine) on the company’s website at www.jm.com/sustainability.




The report, which received an Application Level Check by the Global Reporting Initiative (GRI), presents the company’s approach to sustainability and its progress toward achieving its long-term sustainability goals. In addition to information and case studies associated with energy efficiency, reducing the energy and carbon intensity of its operations, reducing solid waste and increasing use of recycled materials in several areas of its business, the report also highlights the company’s social responsibility in the areas of safety, employee practices and community investment. This year’s report includes 18 fully reported performance indicators applying the GRI 3.1 guidelines.




CertainTeed Ceilings has opened its new research and development (R&D) facility in Kulpsville, Pa. The facility features state-of-the art testing chambers that will aid in the development of the company’s acoustical ceiling products.




The new 9,000-square-foot facility will be used to perform a variety of acoustical tests per ASTM standards, including Noise Reduction Coefficient, Ceiling Attenuation Class and Articulation Class, which measure the acoustics of open office spaces. The facility will also be able to perform Sound Transmission Class testing.




New on the ’net


Isolatek International® has launched a new global website, www.isolatek.com.




Among the many improvements to Isolatek’s new Web-based information system are two that stand out. First is the clarification of the regional aspects of the company’s branding. While the technology and the quality of the material the company makes is identical worldwide, the company markets its materials under two brands—CAFCO® in the Americas and ISOLATEK® in the remainder of the world. Customers, by selecting their respective region, will be guided to the appropriate brand site. Secondly, three distinct sections for Commercial, Petrochemical and Tunnel applications allow visitors to access information unique to their general areas of interest.




Noteworthy are the 3-D animations and interactive apps that illustrate and link to information regarding the usage, selection and application of Isolatek International’s products. Customers can also utilize a Specification Assistance tab which has a comprehensive library of technical information.





Visitors to Roll-Kraft’s website are now invited to take a video tour of the “Roll-Kraft Experience” in a new company overview video available at www.roll-kraft.com.




In the three-minute video, viewers are treated to a behind-the-scenes walkthrough of Roll-Kraft’s manufacturing facilities. The state-of-the art Roll-Kraft facilities are home to more CNC (Computer Numerical Control) machines than any other such factory in North America.




To view this new video as well as other videos featuring the latest Roll-Kraft products and valuable technical tips, visit Roll-Kraft’s YouTube channel at www.youtube.com/user/rollkraft2008.





The International Code Council is collaborating with key standards developers and organizations, such as ASTM, to make the vast array of construction industry safety standards referenced in the 2012 International Codes® available to the building industry on the ICC website, www.iccsafe.org.




The latest series of standards from ASTM now available in the ICC digital standards library include more than 440 standards and five comprehensive collections pertaining to the 2012 codes:
• ASTM Standards: As Referenced in the 2012 International Codes®


• ASTM Standards: As Referenced in the 2012 IBC® & IRC®


• ASTM Standards: As Referenced in the 2012 IBC® & IFC®


• ASTM Standards: As Referenced in the 2012 IBC®.

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