Parks: Install Revenue To Drop Again In '09

By Joseph Palenchar On Feb 23 2009 - 8:00am

Dramatic declines in new-home construction beginning in 2006 caught up with the custom-installation industry in 2008, when installer revenues from residential installations fell 6.7 percent to $8.7 billion, according to Parks Associates estimates.

The drop followed 2007's single-digit percentage gain of 8.8 percent, which followed years of double-digit gains, according to Parks's annual fourth-quarter surveys of installers. The revenues exclude installers' commercial-venue installations and include such home systems as multiroom audio, home theater, low-voltage wiring, and security and control systems.

Parks forecast revenues in 2009 will fall for the second consecutive year but will accelerate in 2010 through 2013 at familiar double-digit rates. In 2009, revenues will fall 6.7 percent to $8.7 billion, but in 2010, the turnaround begins with an 11.7 percent gain and accelerates in each of the following years through 2013. The 2011 revenues will grow 17.1 percent followed by 17.5 percent and 19.5 percent in 2012 and 2013, respectively.

In breaking out installers' residential revenues by hardware sales and labor income, Parks estimated installers' 2008 sales of equipment to consumers fell 4.7 percent to $4.1 billion from $4.3 billion, and labor revenues fell 8 percent to $4.6 billion from $5 billion. Parks forecast similar declines in 2009. Hardware revenues will fall 4.9 percent to $3.9 billion, and labor revenues will fall 6.5 percent to $4.3 billion.

Installers' commercial revenues are also down, declining in 2008 to $2.7 billion from $2.8 billion. Parks forecast flat commercial revenues in 2009. When commercial revenues are factored into installers' total revenues, installer income fell 5.8 percent in 2008 to $11.4 billion and will fall a forecast 3.5 percent in 2009 to $11 billion, Parks said.

In 2008, single-family housing starts fell 40.5 percent to 622,400 following a 28.6 percent decline in 2007 and a 14.6 percent decline in 2006, Census Bureau statistics show. The National Association of Home Builders (NAHB), in a January forecast, said single-family starts would fall another 25.9 percent in 2009 to 461,000 before heading back up in 2010, when it forecasts a 44 percent gain to 664,000.

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