Demographics, the housing market, and demand for building materials.

Historically, housing has been critical to the health of the forest products industry since two-thirds or more of our structural lumber and panel products are consumed in new housing and remodeling Likewise, it is important to the overall economy, accounting for one-fifth of GDP in 2001, and

40 percent of GDP growth in 2001 (Joint Center for Housing Studies 2002). The demographic foundations for housing are expected to be very strong during this decade, due in large part to the influx of immigrants over the past 20 years. Today, one in five U.S. house holds is headed by either a foreign-born individual or a first-generation American (Joint Center for Housing Studies 2002).

Demographic trends also suggest that our population is aging (Jones 1999, USBC 2002), and an aging population has important implications for labor supply, particularly skilled labor. Shortages are already forcing the homebuilding industry to speed up the industrialization process (building or "assembling" homes like we build/assemble automobiles and airplanes) in order to reduce labor costs and improve productivity to remain profitable (NAHB 1998). Industrialization will mean that more com ponents of a home, such as floor trusses, roof trusses, wall panels, and pre hung doors and windows, will be made in a factory and then delivered to a jobsite for installation. It could also mean that more steel and concrete systems will be adopted if the wood products industry fails to shed its commodity orientation and fails to assist the building industry in making the transition to industrialization as painless as possible.

Remodeling expenditures and related building material demand should also get a boost from favorable demographic forces; the aging housing stock; and the fact that renovations, additions, and maintenance to America's housing stock consumes almost as many lumber and panel products as new housing (APA 2002a). According to recent American Housing Surveys (USDC 2000), people aged 35 to 54 are the prime consumers engaged in remodeling, and through the end of this decade, that group will make up about 30 percent of the population. The same survey tells us that there are about 120 million housing units with an average age of about 30 years, suggesting that remodeling markets will be robust for many years to come.

Demographics: An Intuitive Forecasting Tool