Report Overview
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This Freedonia study analyzes the US air & water barriers industry.
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US demand for air and water barriers is forecast to decline at an annual average rate of 1.5% to $8.6 billion in 2027, the result of prices for these products moderating significantly from their 2022 peak. Real demand in the near term will be restrained by the significant levels of air and water barrier demand in 2020 and 2021, which were elevated due to high levels of new housing construction, a surge in home renovations, and severe weather events in parts of the US during those years. However, growth in real terms and in market value will resume later in the 2022-2027 period due to:
a rebound in the commercial building construction market after the pandemic-induced declines of the 2017-2022 period
housing starts that are forecast to start increasing again, after initial declines
Rebounding Commercial Building Construction Leads to Building Wrap & Fluid-Barrier Sales
Among the major weather-resistive and air barrier (WRAB) products, building wrap and its liquid-applied counterpart – fluid-applied barriers – will see gains in both real terms and market value. While approximately 25% of building wrap demand is derived from the commercial market, fluid-applied barriers are overwhelmingly used in commercial applications. Growth will largely stem from building owners continuing previously delayed renovation and repair projects.
Infrastructure Investment & Jobs Act Boosts Demand; Pipelines to See Sizable Gains
Air and water barrier products demand will be bolstered by the Infrastructure Investment & Jobs Act, which was passed in late 2021 and allocates over $1 trillion (over eight years) for a wide array of infrastructure-related projects around the US. Many of these projects – including the renovation of bridges, roads, highways, and water and sewage facilities – will provide opportunities for air and water barrier manufacturers.
Pipelines will be the leading outlet for air and water barrier infrastructure products, due to the importance of protecting potable water pipes from corrosion and cracking, leading to water contamination. Roads and bridges will be an important secondary market for air and water barrier infrastructure products. Beyond the mere size of the US roads system, many roads and bridges are far past due for repair, upgrade, or outright replacement, which will create market opportunities for membrane and liquid-applied waterproofing products.
Historical Trends
Shifts in demand for air and water barrier products can vary from year to year and are determined by numerous factors, primarily those related to building construction activity. They include:
levels of housing starts, particularly in the single-family housing segment
the size and age of the US housing stock
interest rates – low interest rates may encourage home and business owners to take out lines of credit often used to fund repair and replacement projects
the number and type of commercial buildings erected or repaired in any given year
the types of air and water barrier materials most often specified by contractors and other consumers in a particular region of the US
the air and water barrier materials originally installed on the surface
Additionally, multiple other variables can affect demand for air and water barriers in a particular year or over a short period of time. Among these are:
weather conditions, especially outbreaks of severe weather that can cause widespread damage to roofs (e.g., hurricanes and tropical storms, tornadoes, hailstorms, and winter storms)
modifications to state and local building codes
changes in the price of raw materials (e.g., asphalt, metal, acrylics, plastics) that can cause the per-square foot or linear foot cost of air and water barrier materials to increase or decrease sharply
Air and water barrier demand advanced in 2020; this growth was spurred by multiple outbreaks of severe weather across the US and an increase in residential renovation and repair demand precipitated by the COVID-19 pandemic. Market value surged in 2021 as new housing construction and home renovation remained strong and supply chain disruptions and increasing inflation caused prices to rise. In 2022, ongoing inflation caused prices to continue to rise at a rapid pace, which contributed to double-digit market growth in 2022 despite a decline in housing starts and a decline in commercial building construction.
Building Markets Overview
Residential Buildings
The residential market accounts for a greater share of air and water barrier demand in any given year because of the large numbers of new homes – especially single-family homes – that are erected annually.
The residential market will continue accounting for the larger share of air and water barrier demand; however, demand is expected to decline from a high inflation-related 2022 base at an annual average rate of 1.9% to $5.7 billion in 2027. Declines will primarily result from a significant moderation in pricing following the supply-chain and inflation-related spikes of 2021 and 2022. In the near-term, declines will also be caused by a drop in conventional housing starts in 2023. However, demand in volume terms is expected to return to growth in 2024 and rise through the rest of the forecast period as conventional housing starts rebound.
Market value for improvement and repair applications will be impacted by the same pricing moderation as new applications. However, while volume demand in improvement and repair applications will rise through most of the forecast period, greater gains will be restrained by the surge in storm-related repair activity that occurred in 2020 and 2021 – homes that were repaired during this period are unlikely to require additional work in the near term.
Installation Trends
Mechanically Attached Barriers
A mechanically attached barrier is secured to a surface by mechanical means, primarily through nails or staples. Mechanical fastening – such as by nailing or stapling a barrier to a surface – was traditionally the most common attachment method for WRAB, waterproofing membranes, and flashing. Even with the increasing popularity of self-adhered air and water barrier products, mechanically attached products are less expensive and have remained an industry staple.
Rigid flashing (metal, hard plastic) is almost entirely mechanically attached. As metal flashing accounts for most of the flashing used on roofs (the area where flashing is used most intensively), rigid flashing comprises the majority of mechanically attached demand. While some waterproofing membranes are mechanically attached, many WRAB product types come in a mechanically attached form (e.g., asphalt felt, building wrap, building paper).
Demand for mechanically attached air and water barriers is forecast to decline from a high 2022 inflation-related base at an annual average rate of 1.8% to $3.9 billion in 2027. In addition to a moderation in pricing for these products, losses will also derive from:
a decline in housing starts in 2023, affecting demand in the short term
the popularity of self-adhered products, especially in the waterproofing and WRAB product segments
Pricing Patterns
Air and water barrier product price levels differ greatly due to the large number of products used and their varying raw materials and production costs. Factors impacting the price of air and water barrier products in general include:
the price of key raw materials (e.g., asphalt, metal, bentonite, plastic resins)
costs related to the production of air and water barrier materials (e.g., manufacturing equipment, energy)
transportation and distribution expenses related to delivering finished products to distributors
labor – many industries have difficulties finding trained, skilled workers to operate production equipment
In 2022, ongoing inflationary and supply-chain pressures caused pricing to surge from already-high 2021 levels for most selected products. Going forward, pricing is forecast to moderate significantly as inflation and supply-chain issues ease, although prices for most products will remain well-above pre-pandemic levels.