The 2013 Outlook
An economic uptick might be on the horizon for the window and door industry, with many economists projecting positive growth for 2013 and beyond, as the 2012 election recedes into history.
At least, as Kermit Baker, chief economist for the American Institute of Architects, says: “We can’t use the election excuse anymore for delaying decisions.”
In general―barring the usual disclaimer of some form of Armageddon―the economic climate appears less likely to depress the housing market than in recent past. Unlike the last several years, when single-family housing was the worst sector, most industry pundits think it will be the best going forward.
Indeed, we are seeing definite improvement, driven by swelling demand, low interest rates and record affordability.
The U.S. Census Bureau and the Department of Housing and Urban Development announced that privately owned housing starts were at a seasonally adjusted rate of 894,000 in October 2012. This was 41.9 percent above the October 2011 rate of 630,000. At press time, nominal spending activity on private residential construction had expanded in 13 of the last 14 months, putting it nearly 21 percent above September 2011 and at its highest dollar value since the end of 2008.
And the outlook is projected to be even brighter. According to the AAMA/WDMA 2011/2012 U.S. Industry Statistical Review and Forecast, housing starts are predicted to more than double in 2014 from the 604,000-unit low of just four years ago. Anything approaching the 2006 heyday is still farther the future, albeit now in better focus.
“The consensus is we will be at 750,000 starts at the end of 2012,” Baker said in the November 8 webinar, “Post-Election: Where is Construction Headed?”, sponsored by Reed Construction Data. “We forecast a million starts at the end of 2013, but we will still be well below the long-term trend.”
The Window and Door Outlook
As with anything, the success of the fenestration industry is at the mercy of the economic climate. According to Peter Linneman, principal of the Philadelphia consulting firm, Linneman Associates, “GDP is higher than it was four-and-a-half years ago, growing at 2.0 percent [per the Bureau of Economic Analysis estimate for third quarter 2012]. But, we have 3.5 percent more population, so per capita, we are down 1.5 percent.” In a November webinar, Linneman said closing that gap will require a few years of 5, 6 and 7 percent growth.
Although the overall economic outlook might be somewhat skittish, there is reason for optimism in the fenestration market.
Demand for windows and doors in the United States is forecast to rise 9.3 percent per year over the next several years, according to the new report, “Windows and Doors,” from The Freedonia Group Inc. Total demand for both the residential and nonresidential markets is expected to reach $34.2 billion by 2016, up from $21.2 billion in 2011. The Cleveland-based market research firm projects that total demand will recover and surpass the pre-downturn levels by 2016.
The iron might not be hot, but it’s finally warming up.