The siding and exterior trim market has experienced healthy growth during the past decade and was on pace for continued growth in 2020 before disruptions from the coronavirus (COVID-19) set in. The combined market, which reached a value of $10 billion in 2019 and was projected to grow 2% annually in 2020 by research organization Principia Consulting, could experience significant year-over-year contraction. While the lasting effects of COVID-19 are unknown, the virus’s disruption to construction is expected to impact building material categories, including siding and exterior trim.
“The takeaway in siding and trim given reasonable assumptions about the impact of remodeling and new construction is the market is going to be down 10-20% this year compared to last year,” said Casey Olson, an industry analyst for Principia Consulting.
Olson said with many businesses laying off employees, furloughing workers, and contracting salaries for an indeterminate period of time, discretionary spending is likely to be decreased, impacting the siding and trim market. According to Principia Consulting, siding and exterior trim projects are more likely to be discretionary rather than essential projects for homeowners, and therefore are more likely to be put off in times when finances are tight.
Cleveland-based research organization The Freedonia Group projects the slowdown in new home construction as a result of COVID-19 could have a “severe” impact on construction-related industries. Temporary layoffs and a steep decline in home building is expected to cause a short-term drop in business for producers of many items needed to finish a home, including siding and exterior trim. The siding and trim market’s heavy exposure in the new construction market could lead to a higher short-term impact.
Big Picture Vision
Prior to disruptions from COVID-19, industry experts suggested the growth trend was on pace to continue through the next three to four years. As recently as October 2019, The Freedonia Group forecast annual growth in siding demand to increase 2.0% annually through 2023.
Despite growth in other market materials, vinyl has retained its place at the top of the siding and trim market, and budgetary constraints due to COVID-19 may cause this effect to be more pronounced. Materials with a smaller share of the market have been experiencing larger relative growth in recent years, but vinyl’s share erosion at the top of the market has been less pronounced in recent years. According to the U.S. Census Bureau’s most recent data, from 2018, 26% of new homes used vinyl siding as the primary exterior material. Stucco, traditionally popular in the western and southern regions, was used in a quarter of new construction single-family homes. The share of new construction homes with brick siding in 2018 decreased, while the share of new construction homes with fiber cement siding has remained at the same stagnant level since 2016.
Vinyl Remains King
With many homeowners having reduced budgets due to layoffs, furloughs, or COVID-influenced salary cuts, lower cost materials such as vinyl, already at the top of the siding and trim market, could benefit the most in the short-term.
“The speculation is there will be some substitution for more lower-value products. That’s just basic economics: You have less to spend, so you spend less,” Olson said. “Luxury items in general would get hit more. Specific to siding and trim, vinyl’s chronic share erosion has been slowing a little bit.”
Vinyl has a broad appeal to homeowners because of its color, profile, and texture variety. Vinyl manufacturers have made efforts to compete with more luxury materials with enhanced color palettes to provide more curb appeal without the added cost of hardboard panels such as fiber cement and engineered wood. Manufacturers have also increased the durability of vinyl products and products now have longer lengths, thicker gauges, locking systems, and deeper profiles to add structural strength against wind damage.
These pre-COVID efforts resulted in a positive boost for vinyl in the field. Olson said contractors working on high-end, higher-value homes reported using vinyl at a more frequent rate, a phenomena that would have been unheard of a decade ago.
CertainTeed introduced CERTAplank, a wide-faced, durable vinyl cladding option to the market in early 2020. The product combines modern hardwood looks with a lightweight, 7-inch, slim but rigid profile that offers easy installation and no upkeep, according to the manufacturer. ProVia introduced its Timberbay Shake vinyl collection with a wide selection of profiles and colors to enhance design capabilities. The manufacturer also introduced two darker colors to meet design trends for mixed claddings.
Continued Emphasis on Style, Maintenance, and Durability
Consistent with trends from recent years, consumers pre-pandemic were favoring siding and trim products that offer low maintenance and aesthetic appeal.
“Homeowners want it all – siding that is beautiful and low maintenance, but also has a high return on investment and long-term performance features, such as water drainage, wind durability and color fade resistance,” said Brian Kirn, marketing manager in siding product management at CertainTeed. “So manufacturers are constantly coming up with new ways to meet these demands.”
Fiber cement siding and trim, an alternative to vinyl, is engineered to withstand damage from moisture, rot, and seasonal weather. James Hardie, a leading fiber cement manufacturer, said its fiber cement products offer weather resistance advantages over vinyl due to vinyl’s tendency to crack in the cold, and over wood due to the material’s tendency to expand and contract with changes in humidity. Hardie launched its Artisan Shingle in the second half of 2019, a fiber cement product in its Aspyre Collection resistant to wet, freezing, and high heat conditions. To meet aesthetic desires, Hardie offers 15 Statement Collection colors for its fiber cement products and more than 700 ColorPlus Technology finishes that are made to order.
Another alternative to vinyl, engineered wood offers stronger durability than many natural products and is available at a lower price point than natural wood. The material has been among the strongest growing segments in both the siding and trim markets for years, with The Freedonia Group projecting engineered wood trim will have above average annual demand growth through 2024. The research, released during the COVID-19 pandemic, forecast the material will appeal to homeowners’ desires for low maintenance and strong durability. Additionally, engineered wood products, such as LP Building Solutions’ LP SmartSide Trim & Siding offer a variety of styles to complement most exterior architecture. LP recently introduced LP SmartSide Smooth Finish Cut-to-Width Soffit, which offers the benefit of engineered wood’s durability with a smooth style finish.
The PVC market, traditionally positioned as a high-end, upsell product, has been gaining traction in recent years. PVC’s durability, colors, and finishes has increased the appeal of the material market for homeowners, builders, and remodelers.
“New homeowners, remodelers and developers are recognizing the long term benefits of durable building materials or accents,” said Kara Radcliff, product management director of vinyl siding at CertainTeed. “The long-term, maintenance-free benefits are more and more appealing and justify the higher upfront cost of materials [such as PVC] vs. the cost to maintain over a lifetime.”
Mineral composite siding is also growing in demand because of the material's low maintenance requirements and its strong fade and water resistance, according to Mark Lipsius, business development manager at Chelsea Building Products. Chelsea’s mineral composite product, Everlast, has a thick solid core that does not need to be painted and is water resistant. Everlast is now available in a board and batten profile and a variety of colors and Lipsius said the company is seeing homeowners use the product for the entire house, rather than just accents.
Consistent with trends in recent years, builders and contractors continue to favor low-maintenance products that offer easy installation amid the continued skill labor shortage. Additionally, there has been a stronger interest in prefinished siding and trim products as a way to mitigate the labor burden of installation.
“There has been a significant increase in offsite production utilizing panelization, pre-cut materials and pre-installed materials,” Kate Wyeth, senior territory manager for Denver at LP Building Solutions, said. “This seems to be a response to challenges with skilled labor availability, limited space on site and tight scheduling.”