Uncertain Economy Clouds 2014 Forecast, but Fenestration Market Predictions Remain Positive

Rich Walker, American Architectural Manufacturers Association
December 29, 2013
COLUMN : Industry Watch | Markets & Trends

The partial federal government shutdown last fall, the haggling over raising the debt ceiling, Obamacare missteps and its unknown―yet-postponed impact on business costs and personal finances all muddy the waters. Not surprisingly, this has led to a decline in consumer confidence over recent months. The Consumer Sentiment Index fell in October to the lowest reading since December 2012—even as third quarter real gross domestic product grew at a modestly higher annual rate of 2.8 percent.

On the surface, as NAHB observes, faster third quarter growth is good, but the Personal Consumption Expenditures component, historically 65 percent to 70 percent of GDP, slowed to a 1.5 percent annual growth rate. As if on cue, USA Today reported on December 2 that more people shopped over the four-day Thanksgiving weekend—a record of 141 million versus 137 million in 2012―but they spent some 3 percent less, the first decrease since 2006.

Housing: A Few Positives

Despite increasing consumer pessimism, the positives for singlefamily housing are numerous, including a reduction in the rate of foreclosures, still-reasonable interest rates, a rapidly depleting inventory of homes for sale, and swelling demand, tempered only by slowly loosening bank lending practices.

Total housing starts continued on a strong growth curve in 2013, up an estimated 21.3 percent over 2012, with the proportion of single-family units fluctuating narrowly at around two-thirds of that, according to the AAMA/WDMA 2012/2013 U.S. National Statistical Review and Forecast. The report calls for an additional 21.7 percent increase for 2014.

McGraw Hill Construction’s 2014 Dodge Construction Outlook predicts housing will lead construction industry growth in 2014, single-family housing growing 26 percent in dollars, corresponding to a 24 percent increase in units to 785,000. Multifamily housing will rise 11 percent in dollars and 9 percent in units, the smaller percentage gain being reflective of a maturing multifamily market, according to MHC.

Window and Door Market Brighter Still

The AAMA/WDMA review and forecast offers an optimistic view of the status and prospects of the residential fenestration market.

  • For both new and replacement, 2013 prime window sales are expected to tally 45.4 million units, up 13.2 percent from 2012’s 40.1 million. 2014 sales should rise another 12.8 percent to 51.2 million—still short of the 2006 peak of 66.7 million, but on its way back. Remodeling and replacement takes up the lion’s share of these, at 63.3 percent, 60.4 percent and 56.4 percent of the market in 2012, 2013 and 2014, respectively.
  • Residential skylight sales look to increase by 9.2 percent from 865,000 units in 2012 to 945,000 in 2013, with 2014 registering another 10 percent to just under 1.1 million units.
  • Patio doors should reach a little over 3.2 million units sold in 2013, a 13.6 percent increase over 2012’s 2.8 million. For 2014, this should rise by 13.7 percent to more than 3.6 million units.
  • Residential entry doors, logging 8.5 million units in 2012, should grow by 34.1 percent by 2015 to 11.4 million units.
  • Economic uncertainty remains, but outlook for our industry is trending positive.

Rich Walker is president and CEO of the American Architectural Manufacturers Association, 847/303-5664, rwalker@aamanet.org.