Window Sales Should Bottom Out This Year

Residential product demand should see some recovery in 2009, but growth will be slow
A presentation from the American Architectural Manufacturers Association and the Window & Door Manufacturers Association
June 1, 2008
FEATURE ARTICLE | Products, Statistics

With both new home construction and residential remodeling expenditures down, window sales will fall another 11.8 percent this year, according to a new report from the American Architectural Manufacturers Association and the Window & Door Manufacturers Association. Although cautious regarding the high inventory of unsold homes, the study sees the residential market beginning to regain some strength in 2009.

Prepared by Ducker Research Co. Inc., the AAMA/WDMA 2008 U.S. Industry Statistical Review and Forecast also sees losses in the nonresidential window market. There, demand peaked in 2007, and sales are expected to slip slightly this year and continue weakening through 2010.

In 2007, total residential construction fell 24.4 percent compared to 2006, which was already significantly off the peak levels of 2005. For 2008, Ducker foresees a 23.8 percent decline in total housing starts and then a modest increase in 2009.

The biggest drop has come in single-family housing, which was down nearly 30 percent in 2007 and is expected to decline even further this year. The researchers still see about a 10 to 12 month supply, while consumer demand continues to weaken. Multi-family starts have also fallen, but the decline has remained in single digits.

For the first time in many years, residential improvement expenditures also declined in 2007. The report ties the 6.4 percent decrease to the large drop in existing home sales, homeowners' increasing difficulty obtaining credit for improvement, and declining home equity values. These will continue to impact residential improvement expenditures, and sales of windows and doors for remodeling and replacement applications this year. This segment will not see the same sort of declines as the new construction market, but Ducker predicts residential improvement expenditures will decline by 4 percent in 2008, before showing some slight growth in 2009.

This year is expected to see the low point for residential window shipments, with total sales forecast to come in at 52.1 million units (Table 1). That number represents a 26 percent decline since window sales peaked at just over 70 million units in 2005. Slight gains are expected for 2009 through 2011, but the numbers are not expected to get back to peak levels within the forecast period.

According to the AAMA/WDMA study, aluminum windows saw the largest decreases in 2007, as regional markets using this material were particularly hard hit. Both wood and vinyl saw volume decreases as well, although vinyl continued to grow market share marginally. Fiberglass was the only category to show marginal improvement and grew by 6 percent in 2007 and it is anticipated to continue growing through 2008 at a similar rate. Ducker says other types of composite windows experienced decreased sales in 2007, and predicts they will continue to decline slightly this year.

While there are variations due to regional market conditions and usage trends, residential patio, entry and interior door sales follow patterns similar to those seen in the residential window market, Ducker notes. Sales will continue to weaken across the board for these products this year, with some recovery seen for 2009. Patio doors saw a 19 percent decrease in the new construction market last year, while remodeling and replacement sales slipped 5.5 percent. Another overall drop of 13 percent is predicted for this year.

The study does not break down new construction versus remodeling and replacement for entry and interior doors, but points to an overall decline of about 13 percent last year and another 11 or 12 percent decline this year.

Looking at different door materials, the report sees vinyl continuing to take share, mostly from aluminum, in the patio door market. Fiberglass is also expected to grow, but Ducker suggests it will remain a relatively small segment of the market. Fiberglass is also expected to continue to gain market share in the entry door segment, where insulated steel continues to dominate. The study does see those gains slowing, however.

While the AAMA/WDMA report sees sales of most products beginning to recover in 2009, the outlook is not as optimistic for storm doors. The report sees sales of these products continuing to decline through 2011 as the market penetration of higher quality, energy efficient entry doors continues to increase.

Residential skylight sales have been slipping since 2002, as these products have lost their popularity in certain markets. Ducker sees skylights continuing to struggle through 2009, before a recovery begins in 2010.

While the residential market started to decline in 2006, the nonresidential window business peaked last year, according to the AAMA/WDMA report. Nonresidential glazing has enjoyed continued growth, thanks to overall strength in the nonresidential construction market, particularly in office, hotel, and institutional segments. The study also points to increased use of energy efficient glass as leading architects incorporate more daylighting into their designs. Curtainwall products have seen some of the biggest gains thanks to the product's improving energy efficiency and a continued trend to increased open spaces and natural lighting in office, education and healthcare sectors. Shop fabricated windows have also seen an increase in sales, thanks to a strong educational new construction market.

Looking forward, the overall nonresidential glazing market is expected to start declining this year, with further six to seven percent annual decreases in 2009 and 2010 before a recovery begins in 2011.

The AAMA/WDMA study features historical data for 2002 through 2007 and forecasts for 2008 through 2011, based on projections of construction activity and appropriate usage factors developed by Ducker Research. 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.