The first quarter of 2015 wasn't an easy one for the remodeling market. The industry faced sluggish existing home sales, continued labor shortages, and a severe winter, which all negatively impacted remodeling projects.
"Housing turnover typically sparks significant improvement spending as new owners customize their recent purchases to fit their needs and, with sales down last year, remodeling will feel the effects this year," said Chris Herbert, managing director of the Joint Center for Housing Studies of Harvard University, in a statement.
According to the Leading Indicator of Remodeling Activity (LIRA), healthy gains in residential remodeling activity are expected to decelerate in the first half of the year, but they will gain traction again by the end of the year.
However, many remodelers reported stronger growth during the first quarter of 2015 compared with the prior-year quarter. According to the National Association of the Remodeling Industry's (NARI) first-quarter 2015 Remodeling Business Pulse (RBP) data, the majority of contractors reported that their current business conditions are better than they were last year at this time.
Similarly, the National Association of Home Builders (NAHB) reported a Remodeling Market Index (RMI) of 57 in the first quarter of 2015. An RMI above 50 indicates that the majority of remodelers reported that market activity was higher in the first quarter compared with the prior quarter.
Diversifying and winning
Despite a slow start to 2015, WarmlyYours Radiant Heating was able to weather the storm thanks to its diverse portfolio. Third-party integration kits, countertop heaters, mirror defoggers, radiant panels and towel warmers all increased in sales during the quarter. Not coincidentally, these are all upgrades that allow homeowners to renovate their kitchens, bathrooms and other rooms of the house without breaking into the walls or floor. At a time when many remodeling projects are on hold, these products were able to fill the gap.
Third-party integration kits, which enable WarmlyYours floor-heating systems to work with smart thermostats like the Nest, increased more than 3,000 percent in sales compared with the prior-year period. Countertop heaters grew more than 500 percent; mirror defoggers grew more than 200 percent; radiant panels grew more than 60 percent; and towel warmers grew nearly 10 percent.
Capitalizing on the severe weather, WarmlyYours' outdoor radiant heating systems also performed well during the first quarter. Consolidated gross sales of both snow melting and roof and gutter deicing systems grew 30 percent, led by roof and gutter deicing systems, which grew nearly 350 percent in the timeframe.
"We expect our outdoor radiant heating systems to grow even more significantly during the second and third quarters, because these are the prime seasons for installing outdoor radiant heating solutions," said WarmlyYours President and Owner Julia Billen.
Furthermore, sales were particularly strong to trade professionals during the first quarter of 2015. In the United States, sales to trade professionals grew 5.4 percent.
Future growth
In the second quarter and beyond, WarmlyYours anticipates its floor-heating systems to grow as a result of increasing remodeling projects.
The majority (74 percent) of NARI remodelers said they expect to see growth next quarter. Only 8 percent expect business to decline, and 17 percent predict sales to be about the same as they were last year.
For the full year, the LIRA estimates that annual spending on home improvements will increase 2.9 percent.
Tom O'Grady, president of O'Grady Builders in Drexel Hill, Pa., and chairman of NARI's Strategic Planning & Research Committee, noted that pent-up demand from homeowners would drive steady growth in the market.
"I see a large amount of interest in work based on pent-up demand," O'Grady said in a statement. "I also hear the same thing from my fellow NARI remodelers. We see this pent-up demand driving the market for the foreseeable future."
Likewise, WarmlyYours expects its radiant heating products to mirror that growth.
"As the number of remodeling projects increases, we expect sales of our electric floor-warming systems to meet or exceed that growth, supported by continued growth across the rest of our line of radiant heating solutions," Billen said.
To read WarmlyYours' full first-quarter industry report, click here.
Sources:
www.nari.org/remodeling-continues-its-growth-driven-by-pent-up-demand/
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