Spread Thin: Cement Demand Affecting Housing Costs, Timelines

With hurricane-related devastation in the South and many states resuming delayed construction projects after emerging from fiscal crises, the demand for homes has skyrocketed, but the main ingredient necessary for those projects is spread thin: cement.

Cement specialists say the material was consumed at record levels last year in part due to a healthy economy.

Many states out of fiscal crises are breaking ground on delayed construction projects, and with strong demand for home construction, cement is a popular sell.

“The worst thing for us is we've had to lay off about a quarter of our workforce," said Pete Smilanic, president of SCD Corp. (search), whose main supplier rations out the gray matter at about one-half of what it used to, putting a pinch on job timelines and builders.

“It's kind of stretched my whole schedule, so rather than taking 4 1/2 months to build, maybe it's taking 5 to 5 1/2 months to build," according to Brett Koth of New Providence Co. (search), who in turn pays more interest; the homebuyer sees the effect of that increased interest in the form of a higher price tag on his or her new home.

And don't count on imports.

“Forty-seven percent of the world's supply of cement is being utilized in China," said Colorado Ready Mixed Concrete Association’s Paul Schauer.

Beijing needs world-class facilities to host the 2008 Olympic Games (search), and China's economy is booming, with plans to build up to 20 new cities in as many years.

There is also the Katrina effect: Much of the devastated Gulf Coast is still undergoing a cleanup, but once rebuilding begins, economists predict, New Orleans alone will need 1 million to 2 million additional tons of cement over the next five years.

With winter's approach, construction will be slowed, allowing a bit of catch time to replenish inventories — but the shortage is expected to last years.

Click in the video box near the top of this story to watch a report by FOX News’ Alicia Acuna.