After last month’s slump in U.S. housing starts, the CFO of Wienerberger AG, the world’s largest brick producer, is predicting a steady rebound in home construction.
In the latest sign of the effect of this winter’s harsh weather on economic activity, the Commerce Department reported Tuesday that housing starts plunged 17% from a month earlier to a seasonally adjusted annual rate of 897,000 in February.
The slump was particularly acute in the Northeast (down 56.5%) and Midwest (down 37%), which have seen record snowfall and below-normal temperatures this winter, but housing starts also dropped 18.2% in the West and 5.9% in the South.
But Wienerberger CFO Willy Van Riet sounded an optimistic note on the construction outlook in an interview with CNBC Thursday.
“If you look at the U.S. they are now at 1 million housing starts for the whole of the U.S. market. We have been at 2 million, and we need to satisfy the demand of about 1.5 million, so there’s still a huge potential to go for,” he said.
Van Riet suggested the February plunge was a temporary blip. “House-building is a longer process,” he explained. “It’s a bit later in the [economic] cycle as well because you need consumer confidence for people to engage in buying or building a house.”
Economists have noted that new applications for building permits, a bellwether for construction in coming months, rose 3% in February. That increase “suggest[s] that once the adverse weather impact has passed, starts are likely to return to more normal,” Blerina Uruçi, an economist at Barclays, said in a note to clients that was reported by The Wall Street Journal.
But Jim O’Sullivan, chief U.S. economist for High Frequency Economics, said that “Even allowing for the weather, the recovery in housing remains slow at best.”
Van Riet also told CNCB that he saw increasing demand and consumer confidence in the global housing market, though the recovery across Europe had been “patchy.”
“We see a gradual pickup from very low levels, but we see it steady,” he said.