In 2023, the radiant heating industry faced a number of challenges due to complications arising from relatively low home sales activity and some consumer behavior fluctuations in home improvement spending.
Despite this, we saw significant growth in both the final quarter of the year and the year as a whole, particularly in regard to our professional customer segment in the building trades. Our trade professional customer channel saw the most rapid rate of change in Q4 (at 16.1% growth year-over-year).
Despite this positive sign, the national housing and remodeling markets continue to be throttled by low home sales activity and projections of dwindling renovation expenditures in the near future.
In this report, we’ll take a closer look at the performance of radiant heating product sales, with a specific focus on snow melting systems, and analyze the impact that the national housing and remodeling markets are expected to have on future sales.
WarmlyYours Product Sales in Q4 2023
The biggest volume driver of consolidated sales growth in the fourth quarter was the snow melting product line which was up 59.4%. The next biggest volume growth came from roof and gutter deicing (up 52%).
The fastest growing product line was our countertop heaters which posted an impressive 114% growth when comparing the fourth quarters of 2022 and 2023. This product line has been growing in popularity over the last couple of years, due in large part to their use in displays in design showrooms.
For floor heating, TempZone yet again led the way with an impressive 4.1% growth over the entire product line. TempZone includes rolls, cables, and mats and is often paired with the most popular floor coverings like tile, marble, stone, or LVT.
The most significant volume growth came from our flagship product, the TempZone Flex Roll (up 4.9% in Q4 2023). This heating element consists of a heating cable attached to a fiberglass mesh. The mesh can be cut and turned at the end of runs to ensure fast installation and even heating coverage.
The second largest volume growth came from the TempZone Easy Mat (up 40.9%). This product is similar to the TempZone Flex Roll in terms of construction but its installation is even more straightforward since it’s simply adhered to the subfloor where needed before being embedded. The TempZone Easy Mat is used for spot heating, which is where you only install the heating elements under the most used areas of your floor to help cut down on both project expense and running costs.
Customer Segment Growth in Q4 2023
WarmlyYours prides itself on offering a wide array of products to a large range of different types of customers. The fourth quarter of this year saw some interesting developments in terms of customer channel growth.
The fastest rate of change growth was for homeowners, which was up 34%. This customer segment is diversified in their radiant heating product interest, with significant growth in almost every product line.
The next fastest growing customer channels were Amazon (up 27.1%) and Home Depot (up 18.3%). While Home Depot does carry some WarmlyYours products in brick and mortar locations, the growth for both of these customer channels was largely due to ecommerce sales. Due to the prestige and stature of these companies, they often rank high organically in Google for many high volume keywords related to radiant heating and can often be the first point of entry for new customers. The largest volume increase for both channels was for floor heating.
But the biggest volume change in customer channel sales growth was by far for our trade professional customer segment, which was up 16.1%. The importance of this channel can’t be overstated because trade professionals are the most likely to engage in repeat purchases and develop sustained relationships with the company, said Julia Billen, owner and president of WarmlyYours.
“When you start working with a trade pro, it’s not about trying to sell them a system for a specific project,” said Billen. “You’re trying to sell them your company. You’re saying, ‘We can make your life easier and here’s how.’ And that means you have to be on your game in every facet of your business—from maintaining the right product stock levels to ensuring that no matter what question they have, or when, you’ll be there to get them the answer.”
Floor Heating Trends with Trade Professionals in 2023
The uptick in growth for the trade segment in the fourth quarter was mirrored throughout all of 2023, which posted 2% growth year-to-year. Trade is our biggest sales channel by volume (representing roughly one third of all sales), and this 2% increase was the second largest channel sales volume variation (following Amazon) for the entire year.
While almost every single product line saw substantial increases in terms of trade sales during 2023, floor heating led the way with 3.2% growth and the largest volume increase. Floor heating ended up representing 49% of all trade professional sales for the company in 2023. Snow melting, a perennial strong performer with the trade segment, was down to a still respectable 44% of all sales.
Snow melting sales are historically strong with trade professionals due largely to the purchasing cycle of the product compared to floor heating, as floor heating installations are more likely to be performed by DIY-homeowners.
In the future, we do expect to see further increases in floor heating sales in 2024 due to the launch of our soon-to-be-released TempZone Ruler Floor Heating Cable. This product will feature many of the same technical aspects of our TempZone Floor Heating Cable while also incorporating an outer jacket that is marked with measurements to ensure that you’re staying on track during the installation of the cable. Julia Billen said that this product was conceptualized to make installations easier for trade professionals.
“Let’s imagine your customer is a tile installer or an electrician. How many of their projects in a given year include electric floor heating? It might only be a handful, so it’s not like they’re getting daily practice installing a floor heating cable. Anything you can do to make the installation easier and more intuitive for them is a win-win. And that’s exactly why we added the markings to our cable,” said Billen.
The new cable is expected to be launched in the first half of 2024 and will replace all direct sales of the current TempZone Floor Heating Cable.
Sales of the current cable in 2023 were essentially flat when compared to 2022, but several other products saw huge upticks in sales. The fastest rate of change was for the Environ Flex Roll (up 39.2%), which is a cut-and-turn element that is paired with floating floor coverings like engineered wood and laminate.
The next fastest growing product line was the TempZone Easy Mat (previously discussed in this report) which was up 32.2%, along with our line of TempZone Shower Bench and Floor Mats (up 17.5%). Our shower mat products are used in tiled showers to provide heat to the floor or shower bench to make sure every surface you come into contact with is evenly heated instead of relying on only the areas of the shower that the hot water touches.
However, the biggest sales volume growth came from the TempZone Flex Roll. As discussed earlier in the report, this product is our flagship floor heating element for good reason: it’s one of the easiest embeddable floor heating elements to install and it can be paired with the most commonly heated floor coverings. The reason this floor heating product is particularly popular with professional clients is because of its longevity and its ease/speed of installation.
The most popular floor covering for radiant heating sales with trade pros was tile, marble, and stone which showed 5.7% growth year-over-year. This flooring material has always been the most popular to pair with floor heating for a number of reasons. First, the material itself naturally feels chilly when it’s unheated. This, paired with rooms like bathrooms where tile is most often installed, can often result in discomfort from chilly surfaces for many homeowners.
Other popular floor coverings were nailed engineered wood (up 84.9%), floating laminate (up 67.2%), and floating engineered wood (up 35.2%).
These flooring types line up neatly with the most popular room types for trade professionals this year. The biggest room-type for floor heating with trade pros was of course bathrooms (making up nearly 60% of all projects) but the fastest growing ones, ordered by sales volume growth contribution, were as follows: bedrooms (up 20.8%), other rooms (also up 20.8%), kitchens (up 25.9%), and living rooms (up 17.8%).
Julia Billen said that the reason that WarmlyYours places such an emphasis on observing and interpreting sales data from trade professionals is because she recognizes the importance of this customer segment to the radiant heating industry as a whole.
“Trade pros are really the lifeblood of the floor warming business,” said Billen. “It’s great that more and more homeowners are trying their hand at DIY installations but the core will always be professionals. And while manufacturers like us are going to lead the way in terms of innovations, we have to be guided by the needs of our customers. Paying attention to what trade pros are telling you with their purchasing behaviors is one of the easiest ways to anticipate their future needs—and it’s just smart business.”
The National Housing and Remodeling Markets in 2023
Radiant heating sales are generally closely intertwined with home sale and home renovation activity because these are typically the instances with the lowest barrier to entry for installing a floor warming system.
In 2023, the North American housing market continued to be hampered by a multitude of factors including limited supply, exorbitant unit pricing, and growing borrowing rates.
According to the National Association of Realtors (NAR), the fourth quarter of 2023 continued this trend by capping off the year with existing home sales sliding 1% month-over-month and 6.2% in year-over-year sales. Despite this, the prognosticators at NAR don’t believe that all signs are negative regarding future home sales.
"The latest month's sales look to be the bottom before inevitably turning higher in the new year," said NAR Chief Economist Lawrence Yun. "Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months."
In fact, according to NAR, pending home sales were actually up 8.3% month-over-month in December 2023 and up 1.3% in year-over-year sales.
"The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices," said Yun. "Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand."
And while home sales activity may be on the rise in 2024, a lot of the benchmarks regarding remodeling and home renovation spending are projecting slowdowns. The most recent Leading Indicator of Remodeling Activity (LIRA), a quarterly assessment from the Joint Center for Housing Studies of Harvard University, which expects year-over-year expenditures for remodeling and renovation spending to decrease throughout the coming year, with a potential low point of -6.5% by the end of 2024.
“Home remodeling will continue to suffer this year from a perfect storm of high prices, elevated interest rates, and weak home sales,” said Carlos Martín, Project Director of the Remodeling Futures Program at the Center. “These headwinds create considerable uncertainty in the economy, and remodeling spending is projected to fall from $481 billion last year to $450 billion in 2024.”
This projected downturn should be considered within the context of elevated consumer spending on remodeling and renovation compared to pre-pandemic levels.
“Even with the anticipated downturn, spending for improvements and repairs to owner-occupied homes this year is expected to easily surpass the robust levels seen early in the pandemic,” said Abbe Will, Associate Project Director of the Remodeling Futures Program. “Recent improvements in homebuilding and mortgage rates also support the prospect of turning a corner on the rate of remodeling spending losses by the end of the year.”
WarmlyYours Looking Forward into 2024
Regionally speaking, we do expect to see sales of WarmlyYours products grow in a few key areas that are currently experiencing housing market booms, relative to the rest of the United States.
We expect the largest volume increase in sales to come from the Midwest. While this region already made up a significant portion of overall sales (18.9%) in 2023, we expect this area to make up 23-25% of sales in 2024 due to significant economic activity in several major Ohio metro-areas and in Indianapolis, IN.
In 2024, it’s our prediction that the Southeast region will contribute the largest rate of change growth. For 2023, the Southeast only made up 6.9% of all radiant heating sales but we expect that figure to be 10-12% this year. This is because of growth in both North Carolina and Florida. We also expect floor heating sales growth to the lead the way in this region as people realize that heated floors can be a welcome addition to any comfortable southern home.
Regarding the trade customer segment, we expect to see continued growth with these customers in 2024. This growth should be driven by the launch of the pro-focused TempZone Ruler Floor Heating Cable discussed earlier in this report.
We also expect to see floor heating, for a similar reason, to expand to over 50% off all radiant heating product sales in 2024.
Sources:
- Relevant internal sales data from WarmlyYours
- Google Analytics 4
- https://jchs.harvard.edu/press-releases/downturn-home-remodeling-may-bottom-out-2024
- https://www.nar.realtor/newsroom/existing-home-sales-slid-1-0-in-december
- https://www.nar.realtor/newsroom/pending-home-sales-climbed-8-3-in-december
- https://www.usatoday.com/story/money/personalfinance/real-estate/2024/01/05/zillow-hottest-housing-markets-2024/72119594007/
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