Wood Door Demand Swinging Again

Wood door shipments increased l7.2Vo during 1994 to $3.1 billion, representing l.4Vo of total U.S. building material shipments, according to Specialists in Business Information.

On a volume basis, wood door shipments rose ll.2%o to 59.6 million doors in 1994.

The cyclical upturn in factory shipments of wood doors began in 1992, as the economic recovery and favorable interest rates sparked a rebound in the domestic housing market.

Despite the upturn in housing, wood door producers have increased their reliance on remodeling and repair markets, since new home construction remains below pre-recession levels and increasingly uses metal doors. Manufacturers will continue to emphasize remodeling markets over the next decade, as the decline in new household formation causes domestic starts to decline.

In 1995, about 39Vo of total U.S. wood door shipments will be used in remodeling and repair projects compared to 37Vo in 1987 and only 22Vo in 1977. The growth in remodeling and repair demand directly correlates to the decline in housing starts.

As a result of metal door producers increasingly penetrating into residential markets, the wood door industry has seen a shift in its product line shipment mix. The interior and exterior wood door sector has been led by increased demand for panel-type doors, aided by the growing popularity of French doors and the movement to higher-priced specialty wood types of products.

Despite rising competitive pressures, wood door manufacturers have been able to improve their bottom line performance. Average gross profit margins were estimated to have reached 22.4V0 in 1994 vs. l8.5%o in 1982.

Wood door demand has also benefited from larger, new single-family homes. with more bedrooms and bathrooms. In the long-run, the trend will give a further boost to the remodeling and repair market, as existing housing units have an increasing need to replace interior doors.

Wood door shipments are forecast to increase 8.5V0 in 1995 to $3.3 billion, while volume sales are expected to rise 4.0%. The leveling off of new housing starts as interest rates rise will cause wood door manufacturers to further increase their reliance on remodeling and repair markets.

The trend is expected to continue for the rcmainder of the 1990s, as declining U.S. household formation rates result in a downward trend in domestic housing starts.

By the year 2fiX), remodeling and repair markets could account for over 4OVo of total wood door unit shipments.

Home Resales Near Record

Undeterred by rising mortgage rates, existing home sales rose last year to the second highest level ever, according to the National Association of Realtors.

Sales of previously-owned homes climbed 4.5Vo last year to 3.97 million, second only to 1978's 3.98 million.

All regions experienced gains.

Construction Gontinues Climb

Despite an 8Vo downturn in December, total construction contracts rose 6Vo 1n 1994 to $285.2 billion, according to F.W. Dodge.

The growth marked the third full year of recoverv for the construction industry, which increasedTVo in 1993 and 9Vo rn 1992.

Last year, nonresidential building rose lOVo, residential building 5 Vo, and nonbuildin g construction I 7o.

By region, the South Atlantic expanded by 9Vo, the Midwest and West by 8Vo, the South Central 7Vo, whlle the Northeast fell 4Vo.