March 19, 2008 | Vol 3, Num 12
W&D Weekly, Delivering the Fenestration Industry to Your Desktop
The Latest...
More Weakness Seen in Home
Improvement Market
Three Manufacturers to Receive
Energy Star Honors
PGT Expanding in Commercial Market
Simplex to Supply Window Manufacturer
More headlines...
The Outside View...
The Talk...
e-Poll
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The Latest...

More Weakness Seen in Home
Improvement Market
The home improvement market hasn’t seen a decline since 1991, but a new report estimates declines of 2 percent for 2007 and another 1.5 percent drop for 2008. The continued downturn in the housing market coupled with slowing consumer spending is at the heart of these forecasted declines, which appear in the February 2008 market forecast update from the Home Improvement Research Institute and Global Insight.

U.S. Home Improvement Products Market
2007-2012

2007

2008

2009

2010

2011

2012

Billion Dollars

306.7

302.1

310.9

332.1

357.8

381.0

% Change

-2.0

-1.5

2.9

6.8

7.7

6.5


The estimate for 2008 home improvement sales was lowered by $13.5 billion from the previous forecast (August 2007) to $302.1 billion. The updated 2007 forecast for the market came in at $306.7 billion, a downward revision of $2.2 billion. Global Insight analysts point out, however, the long-term outlook for this market still remains quite strong and is estimated to average growth of 6 percent annually over the next 4 years, reaching $381 billion in 2012.

Looking at the economy in general, Global Insight sees the effects of the housing market downturn spreading more broadly, and says the weight of evidence now suggests that the economy has slipped into a mild recession. A confluence of factors has contributed to a slowdown in consumer spending–declining asset values, tightening credit conditions, weakening real income growth, and an erosion of purchasing power from higher oil prices. The recently enacted federal tax rebates will give a temporary boost to consumer spending in the summer, but it is expected consumer spending will be flat during the first half of 2008.

The report says the housing market situation has deteriorated significantly, but the latest HIRI forecast still predicts there will be the beginnings of a turn-around in mid-2008. Overall, it expects housing starts will decline an additional 33 percent in 2008, and existing home sales will fall another 16 percent, with the pace of recovery fairly slow through 2009.

Looking at the sales of home improvement products, the Global Insight report suggests the consumer market sales showed no growth over 2006 in nominal dollars and a 2.4 percent decline in constant prices. Based on data for the first three quarters of the year, it estimates that professional Market sales declined by 7.5 percent in 2007 or 10.2 percent in constant prices.

With the sharper than expected decline of housing market activity and the general slowdown in consumer spending, the analysts see adecline by 0.7 percent in nominal dollars in consumer market sales for 2008. Professional market sales, which have been hit harder by the housing collapse, are expected to be down another 4 percent.

Looking further out, the HIRI/Global Insight report sees sales of home improvement products rebounding 2.9 percent in 2009. A slow recovery in the housing market is expected to keep home improvement product sales growing below trend. A cyclical rebound will occur in home improvement product sales in 2010-2012, with growth averaging 7 percent in nominal dollars and over 5 percent in constant prices

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