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Innovators of building products are boosting bottom lines

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Innovations in air conditioning, plumbing, and walls and ceilings are among products manufacturers are bringing to market to boost revenues, according to the New Home Trends Institute team at John Burns Research and Consulting.

Researchers attribute the innovations to recent regulations intended to promote the responsible use of natural resources, as well as to demand from end users who want products that prioritize health and sustainability in their homes and workplaces.

The New Home Trends team uses a “Vitality Index” to compare revenue between new products and services (introduced in the last 3-5 years) and “mature” products and services.

Manufacturers in energy-related categories like HVAC equipment are experiencing rising revenue from innovative products. Lennox reported a record-setting Vitality Index for new products of 48% in 2022, up from 40% in 2018. During the same timeframe Trane reported an increase from 18% to 21%.

Carrier does not report a vitality score, but that company rolled out 100 new products in 2022 and has more than 9,000 active patents and pending patents worldwide as they and other HVAC manufactures strive to keep up with evolving regulations.

Innovation in the plumbing products category, such as ones that govern water usage, is also driven by features providing savings and convenience.

Xylem, which makes water pumps and waste-water removal systems, raised its vitality index for water systems by 5 percentage points, from 25% in 2018 to 30% in 2020. Masco, which manufactures Delta faucets, has seen a similar increase associated with sales from products introduced in the most recent 3-year period. The company that makes Flo by Moen Smart Water Monitors has a new product vitality target in the 25% to 30% range.

Makers of walls and ceilings that have refreshed their products have also reported gains. Armstrong World Industries, which sells products such as ceiling and wall solutions, has improved its vitality index from the single digits to close to 40% over a ten-year time span. The company serves the office, education, and healthcare end markets. The team at New Home Trends indicated much of Armstrong’s innovation has been driven by a need to provide healthier workspaces in terms of improved acoustics through sound absorption and blocking, better air quality, and thermal comfort.

In addition to benefiting end users, innovations and new products have implications for installers/technicians, distributors, and sales representatives. As consumers opt for new equipment, HVAC contractors may experience difficulties in finding spare parts for repairs. Dealers and distributors will need to be dialed in to inventory management for the right mix of old and new products. Sales reps will need to be educated and trained on the benefits and servicing of new products.

The New Home Trends Institute team expects a steady rollout of new products in the housing industry “due to significant changes in technology and society and significant investment in R&D.” They predict builders and manufacturers with the best products stand to benefit from the higher margins associated with new products.

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