New market report sees tepid growth this year, after weak 2011. A presentation from the American Architectural Manufacturers Association and the Window & Door Manufacturers Association The loss of stimulus tax credits translated into a dip in residential window and door sales last year, suggests a new report from the American Architectural Manufacturers Association and the Window & Door Manufacturers Association. The study sees the weak economic recovery limiting growth prospects this year, but suggests prospects for sales in both the new construction and remodeling/replacement markets will gain some momentum in 2013 and beyond. The nonresidential fenestration industry faces a tougher year ahead. Prepared by Ducker Worldwide, the AAMA/WDMA 2011/2012 U.S. Industry Statistical Review and Forecast predicts sales will continue to fall this year before a modest recovery begins next year. Larger gains will come in 2013 and 2014. The AAMA/WDMA study features historical data for 2006 through 2011 and forecasts for 2012 through 2015 based on projections of construction activity and appropriate usage factors developed by Ducker Worldwide. The database for the study's information has been compiled from a number of sources, including the Census Bureau, and association member and non-member companies. RESIDENTIAL MARKET The housing market actually started its comeback in 2011 due to a large increase in multi-family construction, the report states. Up more than 50 percent last year, multi-family starts are expected to see another 22 percent increase in 2012. Coming off a year of decline, single-family starts are forecast to see a 15 percent increase this year. Looking ahead, the overall housing market should see a strong recovery, with double-digit growth predicted through 2015. By 2014, the AAMA/WDMA study predicts total housing starts will more than double the 604,000- unit low seen in 2009, topping the 1.2 million mark. Pointing to estimates from the Harvard Joint Center for Housing Studies, the AAMA/WDMA report notes that the remodeling and replacement market has seen five straight years of decline. A bit of a turnaround will begin this year, with residential improvement expenditures forecast to increase about 2 percent from $112.8 billion in 2011 to $115.1 billion in 2012. Next year is also expected to be pretty flat as well, with residential improvement expenditures increasing another 2 percent before double-digit gains are seen in 2014 and 2015. The market will top pre-recession levels by 2015, the study notes, with residential improvement expenditures forecast to reach $151.8 billion. WINDOW SHIPMENTS After two years of recovery, demand for windows decreased 8.9 percent to 37.9 million units in 2011 (Table 1). The report attributes the decline to the end of federal tax incentives for energy efficient products that were in place for 2009 and 2010. With new construction sales down about 2 percent, the researchers report a 11.2 percent decline in replacement/remodeling window sales. Last year marked a new low point for demand in this segment in the current economic downturn. Healthier residential markets should translate into better times ahead. Although recovering from a low point, window sales for new residential construction are predicted to be up 18.8 percent this year, with larger gains expected beginning next year. Sales in the new construction market in 2015, in fact, are predicted to more than double 2011 figures. In remodeling and replacement, the percentage gains won't be as large, but demand is expected to grow. The report foresees sales rebounding slightly this year, with growth of nearly 9 percent expected for 2013 and 2014. The study highlights the continued growth of vinyl, which now has a market share of 68 percent overall. Looking forward, vinyl window sales are expected to reach the 40 million mark again, approaching a previous high of 40.6 million units in 2005. Aluminum windows have been losing share steadily in the residential market, but last year, aluminum actually saw an increase in demand in the new construction market. The decline continued in remodeling and repair, however. The report sees sales gains ahead for all types of windows. Fiberglass and "other" window types still account for a relatively small portion of the market, but will see healthy increases on a percentage basis, it is predicted. OTHER RESIDENTIAL PRODUCTS Bucking the trend seen in most residential products, skylights enjoyed a 2.4 percent increase in sales last year. The AAMA/WDMA study says that growth was generated by continued strength in the remodeling and replacement market, which now accounts for about 80 percent of skylight sales. Future growth is projected as well, with increases coming both from the remodeling/replacement side of the business, but the improving new housing market. Entry doors, patio and interior doors followed a pattern similar to windows, with sales declining slightly in 2011 (Fig. 1). Looking forward, residential entry door volumes are expected to be up about 5 percent in 2012. Steel remains the leading material, but fiberglass continues to gain share in the entry door market. Little change in material mix is expected in the interior door market. The study foresees solid gains in sales for such products as the new construction market rebounds over the next few years. Patio door shipments decreased more than 9 percent in 2011. As was true for windows, much of the decline came in the remodeling and replacement side of the business, the study found. The patio door market is expected to rebound, however, with double-digit growth predicted for 2013 and 2014. The gains will be shared by all material types, but fiberglass will enjoy the strongest growth. Sales of fiberglass patio doors in 2015 are forecast to nearly double last year's total. NONRESIDENTIAL MARKETS The end of energy efficient tax credits in 2011, which produced a decline in residential window sales, did not have the same effect on the nonresidential market, according to the AAMA/WDMA study. Although they are predicted to be relatively flat this year, nonresidential window sales were up about 4 percent in 2011. Those gains came primarily on the remodeling and replacement side of the nonresidential market. Ducker bases its nonresidential projections on contract awards, which reflect activity related to new nonresidential construction and major additions to existing structures. Actual fenestration demand typically lags contract awards by up to one year or more, it notes. Already at weak levels due to the recession, contract award totals dropped about 1 percent in 2011. The report sees that trend turning about, with contract awards expected to be up slightly this year, with bigger gains through 2015. As a result, the nonresidential fenestration market will not begin to see big increases until 2014. Having bottomed out in 2010 at about 350 million square feet of vision area, nonresidential window sales are forecast to now expected to approach 600 million square feet by 2015. Nonresidential entry and interior door sales are expected to follow a similar pattern. More Comprehensive Market Data Available The 2011/2012 U.S. Industry Statistical Review & Forecast highlighted in this article is an annual report prepared by Ducker Worldwide as part of a comprehensive project jointly sponsored by AAMA and WDMA. The annual statistical review features national overview data on a variety of residential and nonresidential products. Information about purchasing the report, offered in PDF format, can be obtained by contacting: • AAMA, 847/303-5664, www.aamanet.org • WDMA, 312/321-6802, www.wdma.com In addition to the annual study, a more comprehensive market report is produced bi-annually. The full 2011/2012 Study of the U.S. Market for Windows, Doors and Skylights (released in May 2012), includes the Statistical Review and Forecast, as well as the following additional reports that can be ordered separately. • AAMA/WDMA U.S. Industry Channel Distribution Report profiles the residential and nonresidential market for windows and doors as it flows through the identified distribution channels. • WDMA/AAMA U.S. Industry Market Size Report quantifies residential and nonresidential market volumes, both historic and projected, with data provided for various product types, materials and components • AAMA/WDMA U.S. Industry Regional Statistical Review and Forecast details information for 11 individual regions (California, Mountain, Mid Atlantic, Florida, East South Central, East North Central, West South Central, West North Central, South Atlantic, Northwest and New England).
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