Vinyl siding leads residential cladding market by volume

Siding manufacturers overall saw a record year in 2021, driven by new construction and strong demand for repair-and-remodel projects with extruders of vinyl products gaining a bit of ground — er, wall — according to one survey.

Some 970,000 single-family homes were completed in 2021, compared with 912,000 in 2020, and vinyl siding was the primary exterior wall material on 26 percent (253,000) of them. That slightly lags the use of stucco, which was installed primarily on 27 percent (259,000 houses). Fiber cement was put on 22 percent (215,00) of the houses, followed by brick on 19 percent (181,000), wood on 4 percent (42,000) and "other," which includes concrete block, stone and aluminum siding, on 2 percent (20,000).

The figures come from the U.S. Census Bureau, which releases information about the characteristics of new housing every year in its survey of construction.

Overall, use of vinyl siding increased 1 percent. Great gains were made in the Northeast, where vinyl products were installed on 76 percent of exterior walls, up from 70 percent in 2020. Some 61,000 new houses were built in the region, which is also up from 57,000 in 2020.

"We continue to focus on that market. It's always been a great vinyl siding market. Going to three-quarters doesn't surprise me at all," Steve Booz, marketing and product program management director for Westlake Royal Building Products, said in a phone interview.

With an estimated $2.4 billion in sales, Houston-based Westlake is the fourth-largest pipe, profile and tubing extruder in North America, according to Plastics News' latest ranking.

Booz said many buyers are putting home equity into vinyl siding repair as a good return. He pointed to Zonda Media's annual Cost vs. Value Report, which shows exterior replacement projects on a multiyear streak of delivering the best return on investment for homeowners. Of the 22 remodeling projects in the report, 11 are exterior replacement projects, all of which rank within the top 12 projects.

Zonda says homeowners recoup 67.2 percent of their vinyl siding replacement costs, which are about $18,600.

"Vinyl siding brings people a lot of value in terms of resale and home appreciation," Booz said. "We've added colors, and that keeps the market interested as well. We always try to stay on trend and even help create the trends with our vinyl siding."

Westlake Royal Building Products added five new colors recently: a cool gray (Stone Harbor), a vibrant green (Spruce), a warm brown-gray (Smoky Ash), a light gray (Silver Mist) and a light blue-gray (Riverway).

Residential siding demand saw strong growth in 2021, increasing from 67.3 million squares valued at $8.1 billion in 2020 to 75.3 million squares valued at $10 billion in 2021, a growth rate of 11.8 percent by volume and 24.4 percent by value, according to Principia Consulting LLC.

"2021 was a record year for the siding market, driven by new construction but also with strong R&R [repair and remodeling] demand," Casey Olson, an industry analyst with the Malvern, Pa.-based consulting firm, said in an email.

To increase its presence in North America, Cie. de Saint-Gobain is acquiring vinyl siding maker Kaycan Ltd. for $928 million in cash. Kaycan's KP Building Products Ltd. unit, based in Holly Springs, Miss., ranks as the 23rd largest North American pipe, profile and tubing extruder, according to PN data.

Saint-Gobain also already owns CertainTeed Corp., one of North America's largest siding makers. With estimated annual sales of $800 million, up 14 percent from the prior year, CertainTeed is No. 7 in the ranking of North American pipe, profile and tubing extruders.

Overall, Principia puts the use of exterior materials by volume in descending order as vinyl siding, fiber cement, masonry, engineered wood and others.

"Fiber cement continued to gain ground on the market leader, vinyl, but its volume share has not yet surpassed vinyl," Olson said.

Still, vinyl's share fell slightly despite a strong year for the product, she added,

"Vinyl's growth in 2021 was driven by strong R&R performance across all regions, gaining some ground in its stronghold regions Midwest and Northeast. However, vinyl's growth was hampered by price-based substitution in 2021 with its greater price increases eroding some of its previous price advantage compared to other materials," Olson said.

Vinyl was also adversely affected by resin shortages and typically had longer lead times throughout the year, Olson said. In addition, buyers could not choose from as many colors.

"Limiting dark SKUs to manage down supply constraints lost vinyl a place at the table for bold siding colors for the year," Olson said. "Homeowner preference for better aesthetics, durability and performance has contributed to long-term share decline."

Vinyl siding became the top cladding selected for newly built homes in 1994, with its use as a primary material peaking at 40 percent of the distribution in 2002, when 1.33 million new houses for single families were built.

Despite the higher prices for vinyl siding, the building product continues to be a good deal, Booz said.

"I don't know that we are losing any price advantage in the marketplace because you have inflation across the board," he said. "Cement is way up, which affects brick, fiber cement and stucco. Labor is up everywhere. Those factors affect everybody, so from an affordability perspective, we're still in a pretty good place being the most cost-effective product installed on the wall."

For new colors, Westlake Royal's palette plan is finding inspiration in nature.

"Going forward, we have a blue-gray, brown, green to reflect modern trends, and white has come back, especially with bold black accents on houses," Booz said.

Also, big builders expect to increase the number of what they call express homes.

"It's their lowest price point homes — below $400,000 — and they will absolutely have vinyl siding on them," Booz said. "Everybody has cost pressures, and the builders are getting it from all angles. They have labor shortages, labor inflation, material inflation, regulation inflation. It really hits everybody."

In addition to the Northeast, vinyl siding is popular in the Midwest. Of the 125,000 new houses built in 2021, vinyl siding was the primary wall material on 60 percent of dwellings. Wood was installed on 17 percent, then fiber cement on 12 percent, brick on 7 percent, other 2 percent and stucco 1 percent.

Vinyl siding is a good choice when it comes to affordability and sustainability, according to Matt Dobson, vice president of the Vinyl Siding Institute Inc. trade group.

"We, just like everyone else in the residential market, are keenly aware of the current decline in new construction and increase in interest rates," Dobson said in an email. "But as housing affordability continues to be an issue, we remain excited that they will continue to look towards our industry's products for solutions on both affordability and other issues like sustainability."

The vinyl industry has been the leader in the cladding industry at pushing through more transparency regarding sustainability, Dobson said, pointing to the pending release of the third edition of Environmental Product Declarations for vinyl siding, polypropylene siding and insulated siding.

"As part of this exercise, we are focused strongly on embodied carbon and how building materials play a role relative to climate change," Dobson said. "We are partnering with Building Transparency to produce an online portal for cladding that helps to create a stronger understanding of how material selection can be a part of improving our impact on the environment."

Vinyl siding manufacturers are optimistic about the equity in buyers' homes giving them means to make upgrades, Booz said, as well as the Leading Indicator of Remodeling Activity, which provides a short-term outlook of national home improvement and repair spending to owner-occupied homes.

Compiled by the Remodeling Futures Program of the Joint Center for Housing Studies of Harvard University, the latest LIRA, which was released in late April, shows expenditures to improve and repair the housing stock are expected to grow throughout 2022 and into early next year, but at a decelerating pace. LIRA projects year-over-year increases in residential renovation and maintenance spending will peak at 19.7 percent in the third quarter of this year before sliding downward to 15.1 percent in the first quarter of 2023.

"The level of annual expenditures for home improvements and repairs is set to expand to nearly $450 billion by the first quarter of 2023," said Abbe Will, associate project director of the Remodeling Futures Program. "Yet, the rising costs of project financing, construction materials and labor, as well as growing concerns about a broader economic slowdown or recession, may further slow remodeling growth."

After coming off some very strong years, Dobson agrees the vinyl siding industry is facing new challenges.

"We see signs the new home market is starting to wane a bit but have yet to see a negative impact," he said.

The Vinyl Siding Institute and its members continue to fight cities and states enforcing residential design standards that ban their products or restrict their use. Dobson said the group and homebuilders have picked up momentum in Georgia, where they are pushing for a bill that would ban local governments from setting home design standards that dictate siding materials, location of windows and exterior paint color.

"We have a larger and stronger coalition than ever and a bipartisan approach," Dobson said. "We've had great support from groups like Habitat for Humanity. The continued challenge is that local government groups are strong and like their control and unfortunately don't understand how their actions impact housing affordability. We are hoping to cross the finish line in Georgia next year."

In the South, brick continues to dominate with 31 percent of the 547,000 new homes built in 2020 using it as a primary exterior wall material. Stucco was used on 24 percent of the residences, followed by vinyl siding on 22 percent, fiber cement on 19 percent, other on 2 percent and wood on 1 percent.

VSI and homebuilders also are hopeful about a measure in Minnesota.

"Minnesota looks close to passing a bill that creates a more favorable regulatory environment for our products as well as a stronger environment for more affordable housing," Dobson said. "We think it may pass shortly in 2022."