PodcastBuilding ProductsRepair and Remodeling

What’s Next for Building Products and Home Remodeling?

Dean Wehrli

Dean Wehrli

December 13, 2023
New Homes Insights Podcast

The pandemic taught many lessons. In housing, one was that disruptions in the things we build homes with can, unsurprisingly, bring the industry to its knees. As 2023 draws to a close, we ask: Are we finally past all of that—the rising prices, broken supply chains, and interminable waits for everything from a garage door to window latches that forced builders to wait weeks to sell a home that was otherwise ready to go? Can we finally stop using the phrase “post-pandemic” and just move on?

Matt Saunders, JBREC’s Senior Vice President of Building Products, lives, eats, and breathes this world. On the latest episode of the New Home Insights podcast, he joins me to walk us through the latest in building products and trends in remodeling and discuss the future of these spaces.

New Home Insights Podcast with Matt Saunders

Featured guest

Matt Saunders, Senior Vice President of Building Products Research, John Burns Research and Consulting

The road to where we are now

  • First, there was the boom, ignited by low mortgage rates and cash-out refinancing put toward large remodeling projects. And all those folks who shifted to remote work bought a bigger home further out and had to get it ready for the ball.
 
  • Then came the upsurge in interest rates. Home builders have prospered by solving for affordability and buying down rates, feasting on the carcass of the resale market (slight exaggeration). The knock-on effect for building products is the redistribution of builder incentives from upgrades to flooring, countertops, and cabinets is reducing building product spending per housing start.
 
  • Households are staying in their homes longer and, because of this, can wait for the cost of accessing home equity (interest rates) to come down. These deferrals in large discretionary projects are leading to the current contraction in remodeling spending while setting the stage for strong demand on the horizon.
 
  • To answer the question at the top, though, we are back to a building products world that is primarily acting normally, waxing and waning in response to the factors that have long been key.

The road to where we go next

  • Many building product manufacturers have to look years in advance to calibrate supply and demand for a future that demands decisions now. So, the analytics to understand the future are critical.
 
 
  • Right now, we are showing that building product demand is muted due to cautious household spending (particularly on big-ticket discretionary items) and the high cost of borrowing.

Caution is also the word in remodeling

  • Since much remodeling is discretionary, tighter-fisted spending has led to a pullback. Roofing companies can weather this storm better than others, but the rest of the sector feels it.
 
  • Though most households are cautious, there is a bifurcation in the market where more affluent customers versus trade-down customers are still spending more robustly.
 
  • Mobility plays a role here, too—the nation continues to age, and older homeowners are less transient. The increased share of non-movers in the household population has shifted the balance of importance in remodeling spending to those that stay put, even though recent movers spend more on average.
 
  • As rates ease, Matt sees some positivity ahead, especially for some discretionary categories such as cabinets and countertops. This trend will be further fueled by the pent-up demand brought on by this year’s spending caution and high interest rates.

Everyone wants to know what the next big thing is. For building products, Matt believes innovation may come from adopting technological advancements used by other industries that are disrupting the building products sector. At least for now, incremental change has been the most common response to industry challenges. But never rule out disruptive change in any industry. 

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Home Innovation Research Labs

Home Innovation Research Labs (formerly the NAHB Research Center) is a full-service research, testing, and consulting firm determined to improve the quality, durability, affordability, and environmental performance of single- and multifamily homes and home-building products.

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About The Author

Dean Wehrli
Dean Wehrli
Principal
Dean helps housing sector clients figure out not just what might work and what might not, but why.

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