As the world continues to change, particularly in response to Covid-19, so do relevant trends and relationships for both residential and non-residential building fenestration products. Prepared by DuckerFrontier, the Fenestration and Glazing Industry Alliance (FGIA), formerly American Architectural Manufacturers Association (AAMA), 2019/2020 Study of the U.S. Market for Windows, Doors and Skylights provides a timely update and forecast on construction activity in an ever-changing environment.
Residential Construction Market
After a sustained period of growth over the past decade following the 2009 recession, a steady growth in the construction market began, particularly in residential construction. After growing ~4% in 2018, new housing starts were up 3% in 2019 driven by multi-family construction – 8% as compared to single-family housing starts experiencing an increase of 1% – the highest the market has seen since 2007.While single-family homes remain the largest part of the housing market, it remains approximately 40% below pre-recession levels (2005). The market has begun experiencing a shift to multi-family housing, which can be linked to growing urbanization and strong rental demand.
Demand for prime windows in decreased in 2019, with the demand in new housing windows anticipated to decline to ~10% for 2020; however, the industry is expected to recover and experience growths for 2021 and 2022. The remodeling and replacement markets experienced a moderate decline of 0.5%, which will continue to fall even further in 2020, before a recovery in the following two years of approximately 2-4%. Vinyl windows continue to be favored over other materials, with a decline in aluminum based on regional factors and trends.
The patio door market experienced a mild decline in shipments from 2018 to 2019, despite a solid 5% increase from 2017 to 2018. As with residential window, vinyl patio doors continue to grow in popularity, while wood and steel patio doors continue to decline year-over-year.
Residential entry door demand fell by ~2% from 2018 to 2019. New construction continued to see growth from 2017 to 2019, however, remodel and replacement demand caused a negative impact on overall market demand. A significant decline in the entry door market is anticipated for 2020 and, like windows, will begin recovering with strong growth in 2021 and 2022.
Finally, skylights have grown in use over the last three years. Shipments increased 4% from 2017 to 2018, followed by just under 4% growth from 2018 to 2019. This growth was driven primarily by remodeling and replacement skylight demand. Glass skylights continue to be most popular as compared to its competitive material, plastic.
Moderate growth is anticipated for non-residential construction activity; put-in-place construction has, contrary to residential construction, surpassed its pre-recession peak spending. Based on strong growth in public non-residential buildings, the U.S. Census predicts a 1% increase, however, contract awards have been flat. Based on historical lag time of one year between contract awarding to purchase of building materials (including fenestration products) and construction, demand is anticipated to soften in the near term before recovering.
The most volatile sector has been and is anticipated to remain lodging with major upward and downward swings since 2005; this will continue as it has been viewed as one of the hardest hit as a result of Covid-19.
Non-residential window shipments have been up slightly year-over-year since 2017, the majority occurring in new construction and major building additions. Storefront windows continue to be the largest segment, followed closely by site fabricated windows.
Window and Door Distribution
Residential windows, patio doors and entry doors continue to be sold through multiple distribution channels. Channels include wholesalers, big box retailers, lumberyards, distributors and, in some more limited cases, direct to the end customer. For windows specifically, these distribution channels have remained relatively constant since 2011. Millwork wholesalers prefer to distribute residential entry doors over windows, holding almost 50% of the total distribution share for this product type.
The Impact of Covid-19
Prior to Covid-19, expectations for the construction industry were positive heading into 2020. A strong uptick in activity began in December 2019, and construction activity as measured by the U.S. Census grew by ~8% from December 2019 to February 2020, residential experiencing double-digit growth. Housing starts followed, experiencing an almost 40% growth during the same time period.
The rapid escalation of Covid-19, and subsequent impact on construction activity restrictions, workplace and soon-thereafter state-mandated shutdowns caused an immediate impact on both the residential and non-residential sectors. The most immediate impact on new construction starts activity was experienced in non-residential construction, down 37% from March to April 2020.
Construction After Covid-19
Covid-19 has already established and/or accelerated a new normal, including within the construction industry. Post-Covid-19, there are five aspects likely to drive this new normal:
To purchase a copy of the FGIA 2019/2020 U.S. Industry Market Study (Published May 2020) click here.
DuckerFrontier’s Building & Construction team is at the forefront of key trends impacting the industry amid COVID-19 disruptions. Visit our COVID-19 Resource Hub for the latest insights and implications for global business, or contact us to connect with a team member.