Market Watch: Trends in Lumber and Wood-Based Building Materials

It's no secret that inflation and supply chain issues have plagued the lumber and wood-based building products market in recent years. Higher prices, supply shortages and longer lead times passed from the manufacturer down to the homeowner have led many consumers and Pros to constantly wonder, "When will the cost of building materials go down?"

Beyond pricing challenges, in a HIRI study conducted in May 2022, more than half of professional contractors surveyed reported to the Home Improvement Research Institute that lumber, plywood and other building materials were the primary drivers of their extended project delays.

As the industry continues to navigate pricing and availability challenges, it is critical for manufacturers and retailers to stay informed about where the market is headed and what projects customers are continuing to complete. This knowledge will help ensure you continue to meet customer demand and remain competitive.

So, what should you know about the outlook for the lumber and wood-based building materials industry? Let's take a look at recent market performance and analyze some consumer preferences to get a comprehensive picture of the state of the lumber and building materials market.

State of the Building Materials Market

The wood-based building materials market has experienced both positive and negative performance in recent years, and current HIRI size-of-market research points to a continuation of that pattern.

Consider these figures:

As the data shows, the boom in building and home improvement sparked by the COVID-19 pandemic resulted in high demand for wood-based building materials. However, this trend was followed by unsustained supply due to the disrupted supply chain. In 2023, the industry will likely experience the opposite effect, with a general lower demand for building and construction resulting in a long-term recovery for the market.

Key insight: While these figures may present an uneasy image for 2023, the outlook for coming years is definitely positive. Wood-based building materials manufacturers and retailers should continue measures to keep operations steady while planning for how to strategically take advantage of coming periods of growth.

Product Purchasing and Consumer Decisions

In the HIRI study tracking product purchasing trends of lumber and other building materials, HIRI found that:

• 38% of products in the category are purchased for a planned repair/replacement

• 21% of purchases are part of a larger remodeling project

• 21% are purchased for a planned add

• Only 14% of purchases are made for an emergency repair or replacement

• Most purchases are made by homeowners or their spouse

• 21% of purchases are made by a hired professional

Planned Home Improvement Spend

In the HIRI study tracking homeowners planned projects over the next 90 days and how much they plan to spend on those projects, for Q2 of 2023, here's how much homeowners suggested they would spend on projects that often include a number of lumber and building material components:

• Home exterior shell - $1,000 (down from $1,200 in Q1 of 2023)
• Basement or attic - $700 (up from $600 in Q1 2023)
• Exterior structures - $500 (down from $600 in Q1 of 2023)
• Garage - $500 (constant from Q1 of 2023)
• Outdoor living areas - $500 (down from $800 in Q1 of 2023)
• Shop/Hobby Room - $500 (up from $350 in Q1 of 2023)
• Laundry room, mud room, utility room, or sunroom - $400 (up from $350 in Q1 of 2023)

Key insight: Since the majority of lumber and building materials are purchases for a planned repair or replacement, sentiments are positive that there will be continued demand for wood products even during seasons when residential new home construction may slow. The age of the existing housing stock sparking demand for completing repair and maintenance projects, plus continued homeowner interest in outdoor living projects are further positive signals for the lumber and building materials sales outlook.

Key insight: This demand for wood in deck projects highlights the growing trend in outdoor living and the desire of homeowners to either build or update an outdoor living area.

Channel Trends

When it comes to the shopping channel of choice, home centers are the most frequently used supplier, with 73% of survey respondents purchasing through this means. In-store purchases make up most transactions (70%), while online transactions account for 16%.

Top Purchase Locations

• The Home Depot: 38%

• Lowe's: 23%

• Menards: 8%

Key insight: This data suggests that manufacturers of building materials should prioritize their channel relationships with these large, big-box retailers if they wish to ensure that their products are prominently featured in spaces their customers frequent most often.

Building Material Purchasing Preferences

What exactly are consumers looking for in their wood-based building materials? Read on to discover key purchasing preferences broken down by building material.

Lumber

Type

• Hardwood: 62.8%

• Softwood: 37.2%

Finish

• Unfinished: 78.2%

• Finished: 21.8%

Most customers (76.5%) buy lumber from home centers, with 73.4% preferring in-person purchases and 3.1% making online purchases. An additional 10.4% of customers prefer to shop in person at a lumberyard or building supply store, and 2.8% choose a warehouse membership club.

Drywall/Gypsum Board

Thickness

• _ inch: 13.8%

• _ inch: 47.1%

• _ inch: 28.6%

• _ inch: 10.4%

Most cus_tomers (83.9%) buy drywall/gypsum board from home cen_ters, with 73.6% pre_fer_ring in-per_son pur_chas_es and 10.3% mak_ing online purchases.

Panel Products

Type

• Plywood: 63.8%

• Particle board: 21.2%

• OSB/waferboard: 7.7%

• Wall paneling: 6.1%

• Other: 1.2%

Size

• 2 _ 4: 28.3%

• 4 _ 8: 64.6%

• Other: 7.1%

Most customers (76.9%) buy panel products from home centers, with 75.1% preferring in-person purchases and 1.8% making online purchases.

HIRI members have access to the full Product Purchase Tracking Study for more detailed category insights.

Looking Ahead

The wood-based building materials products market has faced significant challenges in recent years. However, positive strides have been made in supply chain recovery and demand for these materials will continue even through an economic slowdown.

Because the market is changing, as are customer behaviors, If you are a professional operating in this category, join HIRI as a member for access to detailed reports that will keep you up to date on the latest market and customer trends.