This invention is directed to a method of reducing the water demand of expanded perlite that includes obtaining a vibrating screen supported at an angle and placing expanded perlite on the vibrating screen. The expanded perlite is moved over the screen past toward a burner at a rate that heats the expanded perlite to a temperature sufficient to anneal it. The expanded perlite is then moved away from the burner and allowed to cool. Another embodiment of this invention is directed to a method of making a gypsum product. The method includes annealing perlite by the method described above, then preparing a slurry of calcium sulfate hemihydrate, additives, water and the annealed perlite. The slurry is formed into the shape of the gypsum product and allowed to set. This process is particularly useful in making gypsum panels and acoustical panels that benefit from the use of lightweight materials.