Forecasts are tough. Don’t you just love it when the weatherman calls for a 50% chance of rain? How can he be right? How can he be wrong? So, let’s talk about the forecast for the door and window industry. Overall, 2022 proved to be a very good year with most door and window fabricators showing a solid year of growth over 2021, just as 2021 proved to show fantastic growth over 2020. As we all know this building and remodeling frenzy was fueled by the pandemic. People abandoned urban dwellings to build outside of the city and others canceled vacation plans only to spend that vacation money to upgrade their homes. This led to the insane levels of demand that we all experienced the past two years. But with the pandemic waning, vacation plans resuming and interest rates rising, the market for doors and windows is getting back to normal. The fourth quarter of 2022 saw most fabricators getting caught up on their backorders. This led to a soft November and December. So where do we go from here?

Well, going into 2023, there are three factors to consider.

Number one: The housing market is not in good shape. According to a recent [DWM] article, November showed signs of life, but overall, the new construction market is down 15.2% year to date versus last year. This means that going into 2023, we will see fewer new homes built, which means fewer windows. Another recent [DWM] article on the Housing Market Index (HMI) suggests that a recovery in this market sector will not happen until 2023. Indeed, a recovery in the market for single family homes cannot happen until interest rates decline, and even then, the effect upon doors and windows for new construction will not be immediate but rather will lag the leading indicators. The orders for doors and windows come well after the ground is broken on a new start. So, if your business is primarily focused on the new construction market, this is definitely a good time to become more involved in replacement products.

Number two: Multi-family construction will help prop things up a bit. When new housing affordability takes a hit, people flock to apartments. So, the multifamily market will help to prop up overall new construction. As a National Association of Realtors’ article headlines it: The Trend is Clear – Multifamily Construction is on the Rise. The problem here is that the average door and window selling price tends to be lower with these multifamily projects. However, it sure helps in the overall scheme of things to have a backlog of orders once again. Did you ever think you would even say such a thing? Well, one thing is for certain – the multifamily business sector is a mitigating factor helping to keep the overall new construction end of the market stronger. If you do not currently play in the multifamily market, it may be something to consider.

Number three: the replacement door and window market will remain steady. The R&R market is always a steady business, but it is also affected to some extent by interest rates, although not to the same extent as new construction. There are several reasons. If your windows are shot and they need replacement, then you must do what needs to be done and replace them. You put it on a credit card or finance it with a home equity line of credit, or you pay cash. There are also more discretionary remodeling projects which could wait until interest rates subside, but, oftentimes, dealers offer creative finance programs such as no interest for six months, or even a year, to get you to commit now versus later. These programs can really help to keep the remodeling sector strong during inflationary times when interest rates are higher. During my years in the door and window industry, when the new construction market is off, the replacement end of the business has proven to offer more creative financing and has been the saving grace, helping to prop up the overall market even in the toughest of economic times. Indeed, fabricators that provide a mix of both new construction and replacement window products tend to enjoy a more stable business platform overall. It makes perfect sense to play in both market segments.

So, what will it be in 2023? Will it be window “pains” or a steady production of window “panes?” Feel free to comment on what you feel 2023 will look like or write to me at Jimplav@gmail.com.

1 Comment

  1. The “X Factor” regarding the health of the replacement window segment will be unemployment rate and number of working hours. Jobs are necessary for homeowners to buy consumer durables such as replacement windows.

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