Hardwood Floors August/September 2017

The U.S. wood flooring industry depends heavily on residential markets. Catalina estimates residential markets – consumer and builder purchases – represented an estimated 78.9 percent of total U.S. wood flooring sales in 2016. This is up from 77.5 percent in 2012. Manufacturers and marketers increased their dependence on residential markets despite the housing market not fully recovering from the recession since wood flooring has significantly increased its share of new and replacement flooring sales. In fact, wood flooring’s share of residential replacement U.S. Wood Flooring Markets and Factors Driving Demand MARKET MATTERS INDUSTRY INSIGHTS

sales is estimated to have nearly doubled during the past decade. Wood flooring also made inroads in commercial markets. The wood flooring industry has been able to tap into the growing preference for more-upscale hard surface flooring

during this period. This is important since the turnover of an existing home drives residential replacement sales. This indicates that wood flooring manufacturers and marketers benefited from flooring replacement projects undertaken by non-movers. Consumer wood flooring purchases were able to grow at relatively strong rates as homeowners increased their preference for higher-end hard surface flooring. In 2016, some 16 percent of total residential replacement flooring purchases is estimated to have been for wood products. This is up from 12.9 percent in 2012. Wood flooring manufacturers and marketers were able to increase their share of consumers’ flooring purchases by offering consumers more price-competitive, easier-to-install flooring in a wider range of designs including distressed, hand-scraped, and rustic looks for do-it-yourself, buy-it-yourself, and contractor remodeling projects. Replacement sales also benefited from rising home values, which motivated moving and non-moving homeowners to invest in home improvements. The 7.2 percent compound annual growth rate in the value of an existing home between 2012 and 2016 contributed to wood flooring increasing its share of residential replacement flooring sales. In recent years, wood flooring consumer spending also benefited from sharper gains in employment levels and personal income. The key target markets for wood flooring manufacturers and marketers are high-income households, the baby boomer

looks by expanding the availability of prefinished and easier-to- install flooring products. Lower average selling prices during the recession also stimulated demand as competitively priced foreign- sourced products entered the market. Competitive pricing is currently becoming a positive driver of demand since the recent run up in wood flooring prices is already subsiding along with a decline in lumber prices. Consumer response to improved products and pricing has resulted in the residential replacement market increasing its importance to wood flooring manufacturers and marketers. Wood flooring residential replacement sales are estimated to have increased at an 8.6 percent compound annual rate between 2012 and 2016, and climbed to 52.6 percent of total U.S. wood flooring manufacturer dollar sales. This is up from 45.5 percent in 2007. Consumer wood flooring purchases increased at relatively sharp rates during this period despite the sluggish gains in U.S. existing home sales

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