Despite Low Builder Confidence, Door and Window Companies See Better Months AheadNovember 22nd, 2023 by Drew Vass, Executive Editor
Rising mortgage rates, elevated construction costs and limited inventory have pushed housing affordability to its lowest point in more than a decade, the National Association of Home Builders (NAHB) reported. According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), just 37.4% of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income. Mortgage rates that recently neared 8% not only impact homebuyers, but “continue to hammer builder confidence,” NAHB officials said.
At the same time—if recent expansions are an indicator—door and window companies look confident in the months and years ahead.
Pella Products of Arkansas & Missouri recently announced the completion of a $2.5 million expansion and renovation of its showroom and warehouse in North Little Rock, Ark. PGT Innovations (PGTI) announced it will make a $54.3 million investment in Virginia, turning an old Rolls Royce facility into the home of a new glass company.
Last week, one of PGTI’s brands, Western Window Systems, cut the ribbon on a new architectural design studio in Santa Monica, Calif., while Andersen Corp. broke ground on a new Renewal by Andersen manufacturing and distribution facility in Locust Grove, Ga.
Ahead of its $420 million investment, officials for Andersen told [DWM] they were confident in the market for the company’s Renewal by Andersen replacement brand of products. The company referred to a study conducted by Houzz showing that, amid higher interest rates and other challenging conditions, 67% of homeowners said they preferred to remain in their existing homes while prioritizing updates.
Officials for PGTI showed the same confidence.
“While high interest rates will slow home sales, at PGT Innovations, we recognize that homeowners are opting to stay and renovate their current homes, taking advantage of government-backed programs incentivizing energy-efficient and home hardening renovations,” Jeff Jackson, PGTI’s president and CEO, recently told [DWM]. “Our team’s research has led us to open new showrooms to serve our business partners and take on expansion projects in new markets like California, Texas and Virginia to create innovative products that customers desire, like thin-triple insulated glass and lightweight Diamond Glass laminated glass units.”
And with those additions also comes local jobs.
At a ribbon cutting ceremony for Western Window Systems’ new facility, a crowd of over 100 guests heard from Jackson, Debbie LaPinska, the company’s senior vice president and chief customer officer, Jeremy Flynn, vice president of sales for PGT Innovations’ Western division, and leaders from the Santa Monica Chamber of Commerce, who acknowledged the importance of the project to the local economy.
At Andersen’s groundbreaking ceremony in Georgia, officials were joined by Locust Grove Mayor Robert Price, Henry County Chair Carlotta Harrell and other state and local dignitaries.
“Here in Locust Grove, Renewal by Andersen is building both a state-of-the-art manufacturing facility and a place where individuals across a wide range of skillsets will be able to build meaningful careers,” said Chris Galvin, Andersen’s president and CEO.
Construction of Andersen’s 638,000 square foot facility is expected to be completed in late 2024, with operations slated to begin in 2025. At full capacity, the facility will employ approximately 900 team members, with hiring taking place throughout 2024 and 2025, officials said.
Meanwhile, economic and housing data point to better conditions in the months ahead.
“While builder sentiment was down again in November, recent macroeconomic data point to improving conditions for home construction in the coming months,” said NAHB chief economist Robert Dietz. “In particular, the 10-year Treasury rate moved back to the 4.5% range for the first time since late September, which will help bring mortgage rates close to or below 7.5%.”
NAHB is forecasting approximately a 5% increase for single-family starts in 2024, as financial conditions ease with improving inflation.
“Despite the hurdles that many organizations will be facing in 2024, I’m confident that the door and window industry is poised for a strong year,” Jackson said.