If you sell siding and your sales aren't what they were three or four years ago, take comfort. According to a recent report by The Freedonia Group, a market research firm in Cleveland that tracks product evolution and home improvement purchasing trends, total U.S. demand for siding of all kinds ? both for renovation and new construction ? plunged from 112.3 million squares in 2004 to 74 million squares in 2009. This 33% drop roughly parallels a 75% fall in new-home construction but also indicates falling demand for siding used in renovation, i.e., siding replacement.
Uptick to Growth Spurt
The good news: This year Freedonia projects the start of an uptick in the siding market, which will lengthen into a growth spurt of 6.5% per year through 2014 and beyond "driven by a rebound in housing completions." Though housing completions won't reach pre-2006 levels, the report suggests they'll be high enough to fuel demand for siding, though demand won't rise to 2004 levels again until 2019.
New construction has traditionally accounted for the majority of siding sales. But with the rapid decline in new-home building, by 2009 new construction came to represent just 39% of siding sales. The Freedonia Group study asserts that by 2014, new-home construction will again account for the majority of siding sales, a trend that will continue through the decade. The study forecasts a more modest rebound for siding replacement, with growth limited by the fact that consumers generally replace siding only when it has become damaged or worn, and siding, once installed, has a 25-year life span, depending on the material. Also limiting growth is the tighter credit market, making it more difficult for homeowners to get home equity loans ? a major source of financing for home improvement jobs.
What feeds the market, the study notes, is the steady aging of U.S. housing stock, with the average age of houses at nearly 35 years.
Shift in Product Preference
The study finds that vinyl remains the most widely used siding material (55% of total demand in 2009) and predicts demand for vinyl will remain strong, growing 6.5% annually.
Still, fiber-cement siding is expected to grow at almost twice that rate (12% annually) with that growth taking place at the expense of wood and to a lesser extent, vinyl siding. The big market-share loser in repair/replacement siding is wood, which has already lost ground to other materials. By 2019, the Freedonia study predicts, fiber-cement sales will outpace wood, which in 1999 was the second most popular siding material.