Connor Lokar, senior forecaster, ITR Economics, and Chris Beard, director of building products research, John Burns Research and Consulting, took the Main Stage at GlassBuild America in Dallas on Sept. 30 to discuss economic trends for the commercial and residential markets.
Lokar notes non-residential construction is growing but slowing, and he expects a softening of commercial market outcomes next year. He forecasts that the market is "about to go into the woods on the non-residential side." Publicly funded projects such as health care and education may not see the pinch as soon or as much as privately funded projects. The market, however, should come back around in 2026-27.
Beard sees great opportunity for the residential side, including normalizing inflation and appreciation of home sales. He notes an immigration surge contributes to employment growth and household formation, making it all the more important for the industry to eat into the housing undersupply, which JBREC estimates is about 1.5 million units. Remodeling, meanwhile, is in a stage of pent-up demand. Many homeowners are deferring big-ticket remodeling projects that require financing until financing becomes cheaper. Consumer sentiment, though rising, remains low compared to 2015-2019. "Growth won't be great until sentiment improves," he predicts.
Housing affordability is a notable headwind and what Beard describes as the dark cloud looming over the industry. A reported 67% of production designers lower a product's finish quality to reduce costs in a house. Growing volumes and declining revenue also reflect the industry solving for affordability. Ultimately, Beard says, "We may have reached the bottom in residential fenestration. We're optimistic going into next year."