By Megan Salzano Since early summer 2020 it has been predicted that housing would lead the U.S. economic recovery after the impact of the COVID-19 pandemic. The recession caused by the pandemic was unlike any of its predecessors, and, at the same time, housing was not taking a hit like it did in recessions past. Fast forward to Q1 2021 and the flooring industry has indeed been uplifted by the housing market—residential remodeling in particular.
Floor covering retailers across the country and even manufacturers continue to reap the benefits of the robust housing market that blossomed in Q2 2020 and has continued into 2021.
Over the last few weeks, major housing statistics have revealed how strong a year 2020 was, in spite of challenges caused by the pandemic. Robert Dietz, chief economist for the National Association of Home Builders (NAHB), noted that historically low interest rates, a pivot for consumer preferences toward housing and a measurable suburban shift for location decisions lifted home sales, home building and remodeling.
By the numbers
Following an initial dip in early 2020 due to the pandemic, it is clear more than a year later that single-family housing is driving the current housing market boom. According to data from the NAHB, single-family housing starts increased 11.7% for 2020 as a whole, increasing to 991,000 total builds. The NAHB forecast is for ongoing gains for single-family construction in 2021, although at a slower growth rate than in 2020. Production is expected to rise an additional 5% to 1.03 million this year—marking the first year that total annual single-family production has exceeded 1 million since the Great Recession.
NAHB forecasts show remodeling will also remain strong as people continue to upgrade existing homes for more purposes, such as home offices, remote learning, etc. In fact, residential remodeling is expected to register a 4% gain this year over 2020 and increase 2% in 2022. “The biggest factors prohibiting stronger growth are mainly the volatile material prices and labor shortages,” noted Paul Emrath, NAHB’s assistant vice president for surveys and housing policy research.
During an online press conference hosted by NAHB during IBSx 2021, professional remodelers from across the country agreed with the forecast, citing increased demand during COVID-19 and consumer confidence. Vince Butler, a remodeler from Clifton, Va., said, “After the dip at the beginning of the pandemic, remodeler confidence bounced back, and it continues to remain at a high level as remodeling spending is expected to reach $285 billion in 2021. There is steady consumer demand as Americans are at home much more during the pandemic. This gives homeowners more time and a desire to invest in their homes.”
Supplier sentiments
The boom in the housing market caused mainly by consumers spending more time at home with higher levels of disposable income that cannot be spent on vacations or entertainment, has no doubt been a boon to the flooring industry. Suppliers agree the increased demand for single-family homes and remodeling has exceeded previous expectations and created opportunities for growth. On the retail side, store owners across the U.S. have pointed to a surge in sales and even backlogs of projects leading well into 2021.
According to Scott Gibson, Mohawk’s senior director of sales operations, builder and multi-family, company sales have seen a surge due to the increased demand on new construction, single-family homes. “Builders have been struggling to keep up with the high demand in the market and have exceeded their original forecasts for starts and finishes,” he explained. “We see no immediate end to the trend and expect a positive business result through 2021.”
Herb Upton, vice president of residential product and channel strategy, Shaw Industries, agreed, noting that new housing starts and pent-up demand are at all-time highs—and the financial environment is right for homeowners to invest discretionary income back into their homes. “Particularly at a time when travel and other recreational activities are still on pause, it’s only prudent for people to take advantage of appreciating home values by updating flooring and making other repairs,” he said.
Upton also noted that the positive trends in the housing market are creating opportunities for strong growth in residential retail. “Our customers are continuing to see the advantages of this boom in business in 2021. Consumers today have never been more focused on the home—and how it provides a sense of security and well-being from the outside world—and we see this healthy home movement having a positive impact on our retail customers’ businesses, even beyond 2021.”
Jimmy Tuley, vice president of sales, residential, Mannington, also noted the strong fundamentals in both new home starts and existing home sales as a major driver to the strong finish to 2020 and start of 2021. “With existing home inventories being low, along with an extended anticipation of low interest rates, we expect this strength to continue well into 2021,” he explained. “Mannington has always had a strong presence in specialty retail that services the remodel market that comes with existing home sales, but we are doubling down with early launches and key new stories like Microban on LVT to take advantage of the market strength.”
Sweden-based Välinge has also felt the positive impact. “The housing market in the U.S. has positively impacted Välinge’s business, too,” said Lennart Thalin, region manager North & South America, Välinge. “From a licensee perspective, many have reported all-time high-volume figures for the last few quarters. That’s across all categories, with resilient seeing the biggest increase and laminate and wood performing strongly.”
Retail reactions
While it seems like there are mostly blue skies ahead, there have been challenges to be faced and could be more ahead. Mohawk’s Gibson pointed to the potential impact on product availability and service. “We have streamlined our approach to product in order to better align with the demand,” he explained. “Mohawk is positioned well as we saw the potential for continued growth early in 2020. Our late 2020 and 2021 product launches support our efforts to provide builders with trend-setting looks and timeless patterns consumers and home buyers want.”
Shaw’s Upton is focusing on the retail landscape moving forward. “While there’s a long runway for positive growth in builder/new construction, it will be interesting to see how residential retail business continues as the vaccines become more widely available and people resume other social activities.”
Currently, the retail community continues to report strong growth. John Taylor, owner, Taylor Carpet One Floor & Home, For Myers, Fla., told FCNews, the ongoing shift to suburban settings has provided a lift. “In Florida, we have been the beneficiary of people moving to our area from up north and this has caused the real estate market to explode,” he explained. “It is now a seller’s market. This boom has created great demand for our flooring products and therefore most businesses in our area are doing very well.”
For Phil Koufidakis, owner, Baker Bros., Phoenix, pent-up demand continues to support his residential remodel business. “There is continued release of pent-up demand in the marketplace and much of that has to do with rising home prices, rising savings, a rising stock market and historically low interest rates,” he said. “Anytime the housing market is strong bodes well for our industry. I anticipate the housing market will continue to be positive for 2021 and that will have a positive impact. Whether people are moving and renovating their new home or taking confidence in the newfound value of their existing home (and renovating it), it’s all positive for us.”
