Without question, the past two decades have been a period of tremendous growth for the wood flooring industry. The driving force, simply put, is demand. More and more consumers are yearning for high-end hard surface flooring-and they are installing them in larger and more expensive homes. In 2005, the average size of a new single-family home was pegged at about is 2,481 square feet, up from 2,095 10 years ago for an increase of 18.4 percent. During that same time frame the average value of a new single-family home jumped by an astonishing increase of 86.3 percent. Homes selling for $300,000 account for more than a third of the total new single-family homes sold last year. Homes in this price range accounted for only 13 percent of the market in 1999. This trend toward high-end homes is fueled by several factors, most significantly lower interest rates and rising personal income levels.
Another factor driving demand for wood flooring is existing home and apartment sales. The more than 7 million units sold last year is about 5.6 million units more than what was sold in 2002. This, not surprisingly, has fueled the residential remodeling market. Whether it is the new owners personalizing their space or the old owners trying to increase the value, many of these purchases are geared toward high-end upgrades which often means wood flooring.
Our industry has responded to this increasing demand by giving consumers what they want: more choices. Long gone are the days when a simple 2 1/4 inch strip oak floor would satisfy nearly everyone. Oak still dominates sales but exotics species including Brazilian cherry, Australian cypress, South American santos mahogany, African wenge and Asian bamboo are having a big impact on the market. They allow consumers to achieve a unique look that reflects their personal style.
In addition to exotic species, textured floors are gaining popularity over floors with a smooth, glossy finish. Hand-scraped floors, distressed floors, and reclaimed wood floors are choices gaining a much higher profile in the market. Often they offer one-of-a-kind floors for consumers who want something a bit different from their neighbor's home. Also bring more personality to the floor are borders and medallions that give consumers more choices with minimal additional expense.
The hardwood floor market is also seen increasing demand for manufacturer finished products, which are especially appealing to the do-it-yourself market. Engineered manufacturer finished wood flooring generally is less expensive than solid wood flooring products and easier to install. This makes them particularly popular for remodeling projects. Also, the increased dimensional stability of the engineered product enables consumers to install it in areas where a wood floor was once unthinkable like in basements and direct-glued to concrete slabs.
It is estimated that engineered wood flooring accounts for 41.2 percent of total wood flooring sales for 2005, representing 479 million square feet. This is a 31.6 percent increase over 2002.
These trends and others have contributed to an estimated 11.2 percent increase in wood flooring retail sales in 2005, representing $4.1 billion. Specialty floor covering retailers continue to dominate sales, but large home centers continue to gain market share.
The two largest home center retail outlets, The Home Depot and Lowe's, are estimated to have accounted for 20.5 percent of total 2004 hardwood flooring retail sales in the United States. This trend, along with increasing competition from imports, has resulted in a decline in average sale prices per square foot. For 2005, the average sale price dropped 0.9 percent to $2.23 per square foot. However, it is important to note that average sale prices for wood flooring manufactured in the United States are estimated to reach $2.40 per square foot during 2005. This is 45.5 percent higher than the average import price.
Looking ahead, wood flooring is expected to remain a growing sector of the United States floor covering industry. Catalina Research projects that dollar market sales will increase at a 7.7 percent compound annual rate during the next five years, and climb to $3.8 billion. Unit sales are predicted to rise 5.7 percent annually during this same period to 1.5 billion square feet. By all accounts, wood flooring is here to stay.