Happy 2023! I haven’t had the opportunity to write on this page since last summer; I spent late summer and early fall on leave welcoming the arrival of our second child. Much has changed in the six months since I last wrote—certainly on a personal level, but also with the business conditions in which residential fenestration manufacturers and suppliers are operating.
The annual Industry Pulse survey and corresponding report is one of my favorite editorial projects of the year and this year’s report was especially interesting. Although the past several years have been characterized by overwhelming demand amid supply chain and material disruptions, the responses told a different story this year.
Perhaps most notably, the supply chain is normalizing. Dan Gray, director of sales, North America, Roto Frank of America Inc., says that while shipping container costs escalated to nearly $26,000 last year, they’re back down to their historic levels of $4,000 to $5,000. Fewer companies are on allocation and materials aren’t so elusive. “Supply from our raw material core suppliers has improved dramatically. It’s not perfect yet, but it’s improved,” says Gray. Many other companies echoed similar sentiments in this year’s survey.
Demand is also reducing to more sustainable levels. Backlogs are healthy and, in most cases, it no longer takes a record amount of time to turn around window and door orders.
Rising mortgage rates and a limited housing supply also meant more homeowners decided to put off moving. People staying in their existing homes, coupled with the rising age of the home inventory, is a boon for the replacement window market. The Industry Pulse survey reflects this trend, with slightly more companies indicating a tendency toward greater replacement versus new construction activity compared to last year. “R&R is part of the cyclic nature that happens when people decide they’re going to stay put,” explains Mike Turner, senior vice president of sales and marketing, YKK AP America. “How do they improve their living environment and lifestyle? You’ll see people change their windows out, remodel their kitchens and do additions—things they typically would have let the next homeowner do instead of them.”
Despite operating under a dismal economic backdrop and fears of a recession, no one predicts it will be a repeat of the housing market crash of 2008. John Moore, vice president of marketing, GED Integrated Solutions Inc., explains it: “The banks and consumers are in a much better financial position than they were in 2008; defaults on loans are at record low levels. Home equity levels are high. Additionally, the housing inventory is significantly below potential demand. There are some projections we currently have two to two and a half months of inventory, whereas we had 11 to 12 months of inventory in 2008.” Moore also predicts that as mortgage rates adjust to lower levels, buyers will be back.
The residential fenestration industry is a constantly evolving story, and this year may mark the beginning of a markedly different business environment than the one we’ve worked in for the past several years.