The mood was upbeat at the 2003 International Builders Show, which attracted more than 90,000 attendees. That's a new record for the construction trade's love fest, which traditionally has drawn about 70,000.
The aisles of the trade show floor at the Las Vegas Convention Center were buzzing through the final hours of the four-day extravaganza, an anomaly in the trade show world.
But consider the factors motivating attendees: The housing market has shown remarkable resilience in an otherwise weak economy, buoyed by low interest rates.
The strength of that sector has forced some manufacturers to shift their focus and attempt to tap areas tied to housing starts, the largest barometer of construction industry health.
Housing starts in 2002 came in better than anyone expected, registering at 1.7 million. Those final numbers were released Jan. 21. Through 2003, housing starts are expected to remain steady, according to leading economists at the show.
The forecasts, of course, make a few assumptions: The situation in Iraq will be resolved in the early part of this year, and the situation in North Korea will simmer down through diplomatic negotiations. Additionally, the three economists who delivered outlooks at the show did not factor in any type of fiscal stimulus package. Such a package should be added to the equation before long, officials said, because the Bush administration and the Democratic leadership of the House unveiled proposals the first week of January.
``The great strength of housing starts through that fourth quarter will help overall economic growth in the first quarter, because of construction activity associated with housing starts,'' said David Seiders, chief economist with the National Association of Home Builders in Washington.
Expect each quarter hereafter to improve, and the unemployment rate to start to decrease, he said in a Jan. 21 presentation.
For Coastline Plastics Inc., based in Yulee, Fla., 2003 means a national launch of its Evertuff chlorinated PVC pipe for use in hot and cold plumbing systems, said Mike Porter, vice president of national sales. He would not disclose figures, but said launching the product nationally means the firm will double sales. Coastline, owned by Victaulic Co. of America in Easton, Pa., is adding ``a few'' extruders now. The company also has injection molding operations.
Of course, there are certain areas of the country where the housing market is outperforming others. The best markets include the Southwest - that is, the spine of the Rocky Mountains, starting from Idaho and going through Arizona, said Stanley Duobinis, NAHB forecasting director. Those strong, long-term markets can thank lower-cost structures, more favorable business laws and growing labor forces.
``The industrial sector really did see a recession,'' he said. ``Even though housing and other sectors didn't, that hurt the Midwest severely in many cases.''
But the industrial sector should creep back this year. According to Freddie Mac, based in McLean, Va., gross domestic product growth will accelerate during the next year, rising from an estimated 1 percent growth rate during the final three months of 2002 to a 3.5-4 percent rate during the second half of 2003.
Two factors are important to that acceleration: a rebound in business investment spending and continuing strength in consumer spending, said Frank Nothaft, Freddie Mac's chief economist.
It's the consumers who have the cash and the spending power, after all. Home equity has grown by $2 trillion in the past three years, Nothaft said. Home equity accounts for about one-half of the average family's total net wealth, helping to offset declines in stock market wealth.
Officials are looking toward home equity to boost remodeling activity, which declined in late 2002, as is typical in winter months. Remodeling was strong overall in 2002, according to the Remodeling Market Index, a barometer based on quarterly surveys of 600 professional remodelers.
As for the long-discussed housing bubble, Nothaft said it does not exist at the national level.
``I don't think there's a house-price bubble anywhere at the local level, either, in the U.S. today,'' he said.
``I think house prices really are driven by economic fundamentals, one of the important drivers being the home mortgage rates. Mortgage rates have fallen to 37-year lows and that's an important stimulant for the economy.''
Nothaft predicts the average home price will grow 3-5 percent during the next three years.
Also at the show, Gary Acinapura, Alcoa Home Exteriors Inc. president, said the vinyl industry overall has not communicated benefits to the consumer.
``Up to this point, it's been a maintenance-free story, and the maintenance-free aspect is across all vinyl products. I think we've avoided the consumer because we haven't had a good message to bring to them until now,'' he said.
Crane Plastics Co., based in Columbus, Ohio, is figuring on 10-30 percent growth in each of its five business segments. Its composite decking and railing division, TimberTech Ltd., should experience the best growth, said President Mike Crane.
Still, Crane said he expects his firm's vinyl siding segment to do quite well in 2003, as the material still is gaining market share.