Chief executives for four leading door, window and hardware companies remain optimistic about demand for their companies’ products, despite what some describe as a “weak” housing market and sentiments about a possible economic slowdown.

New home starts increased in July after declining in June, despite increases to interest rates that brought mortgage rates near a high mark set in late 2022. With those economic fluctuations and changes in his company’s recent performance, “We are now more confident in our belief that we are seeing a return to normal seasonality in our business,” said George Wilson, president and CEO of Quanex.

Quanex realized a decline in net sales of nearly 12% for Q2 of 2023 in its North American Fenestration segment. But the decrease also stands in stark contrast to a record quarter just a year prior, Wilson pointed out, while attributing the recent change to surcharge rollbacks and index pricing mechanism triggers in North America, as costs for raw materials decline. “We controlled the things we can control, and we will continue to focus on operational efficiency and flexing our cost structure accordingly,” Wilson said.

Wilson is just one of several door and window execs showing confidence amid a less-than-stellar housing market. Nico Delvaux, president and CEO of hardware manufacturer Assa Abloy, described the current residential market as “weak,” though his company still reported a 3% increase in sales for Q2. Despite lower levels of residential construction, a positive gain stemmed from short-term cost measures, Delvaux said, designed to protect profitability.

Assa Abloy is just one company that expected and prepped for a possible slowdown. Masonite CEO Howard Heckes told the hosts of CNBC’s Squawk on the Street that, “Demand is soft,” adding, “However, it’s exactly how we expected it coming into the year.”

In recent years, fluctuations between home building and renovations have equipped the industry with resiliency, as demand fluctuates between the two sectors. For example, as higher mortgage rates lead more homeowners to stay put, they’re focusing on improvements instead, Heckes and other executives said. As the market for new homes struggles under higher interest rates and other factors, the Leading Indicator of Remodeling Activity (LIRA) by Harvard Joint Center for Housing Studies shows steady increases in homeowner spending on improvements and repairs over the past couple of years, climbing in Q2 2023 to $486 billion. The market for home improvements and renovations led to 2% sequential sales growth for PGT Innovations, said Jeff Jackson, president and CEO.

At the same time, survey results from the latest RCLCO Real Estate Consulting’s Real Estate Market Sentiment Index, a semiannual survey of real estate market participants, reveals that many believe a national economic recession is imminent. The majority (84%) believe there will be a recession in the next two years, with nearly half (47%) pointing to the next 12 months. Nearly a third (29%) said they believe we are already in a recession, but the majority of survey respondents feel that a looming recession will likely be mild, at 0% to -2% GDP.

So far as how the housing market might respond to additional pressure, “Underlying demand for for-sale new homes remains, and any adjustment is likely to be far less severe than what was experienced in 2008 because the for-sale market is still undersupplied compared to new household formation,” said Kelly Mangold, principal for RCLCO Real Estate Consulting in Bethesda, Md.

In the meantime, “We continue to be cautiously optimistic for the second half of our fiscal year, especially as we gain confidence from recent results and our belief that we are seeing a return to normal seasonality,” Wilson said. “In addition, the long-term underlying fundamentals for the residential housing market remain positive.”

Market activity for new construction “suggests a solid recovery in the second half of 2023 based on the recent recovery in permits and starts trends,” Jackson said.

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