An Assessment of the Residential Siding Market in the Puget Sound
Fact Sheet #23
The market for residential decking and siding products in North America has become increasingly competitive over
the past two decades. An increasing assortment of substitute products, coupled with the aggressive promotional and
product-service campaigns of competitors, have contributed to the declining market share of solid wood siding. To
determine which factors influence builders’ and homeowners decision to use western red cedar (WRC) as a residential
siding material relative to substitute products, the Center for International Trade in Forest Products (CINTRAFOR)
conducted an in-depth analysis of the market for WRC residential siding products in North America.
The Residential Siding Market
Fifteen materials are commonly used in the residential siding market. Vinyl, structural panels (i.e., OSB and plywood), brick,
and hardboard, however, are the dominant residential siding materials installed. The siding market is characterized by
aggressive price competition, low product differentiation despite significant contrasts between the physical attributes of the
products available, economies of scale, well-developed marketing and distribution systems, and an intensification of
competition among manufacturers and distributors.
According to market share estimates, vinyl siding products control 36.7 percent of the residential siding market. Trailing vinyl
siding in market share are structural panels (27.9 percent), brick (17.2 percent), hardboard (13.2 percent), WRC (2.5
percent), and aluminum (2.4 percent). In the past eight years, the total residential siding market has grown at an average annual
rate of 0.46 percent. Vinyl siding use has grown at an average annual rate of 10.25 percent. The only other residential siding
material to experience growth in this same period has been WRC, which has grown at an average annual rate of 3.52 percent.
Relative differences in material and installation costs typically establish the competitive relationships between materials used in
the residential siding market. In the residential siding market brick and WRC, are differentiated to a much greater degree by
the image they project. Past research has shown that consumers perceive vinyl, aluminum, hardboard, and plywood residential
siding materials to be close substitutes for one another. Therefore, these four residential siding materials compete primarily on
price and installation cost.
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Relative to competing residential siding materials, consumers perceive WRC and redwood siding to be expensive and
time-consuming to install. Builders’ believe the price of WRC siding is unstable and its grading is inconsistent. Despite this,
consumers believe WRC has tremendous curb appeal and a high status image, nearly equal to that of brick. Unfortunately, the
image and beauty characteristics of WRC residential siding are overshadowed by consumers perception that WRC is
expensive.
Survey of Puget Sound Residential Siding Market
The survey results indicate that the following four residential siding materials have a significant presence in the Puget Sound
market: OSB, hardboard, plywood, and WRC, Table 1. Many respondents indicated that their wood fiber-cement residential
siding use has increased substantially over the past five years. This may be the result of the increased promotional effort on the
part of a major producer of wood fiber-cement siding in the U.S. West.
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The Puget Sound market represents a disproportionately large share of the national market for OSB siding. Two factors may
be working either independently or together in creating this disproportionate market presence. First, OSB residential siding
manufacturers may be specifically targeting the Puget Sound market through promotional efforts due to distribution advantages
associated with the market and its port access. Second, builders may simply prefer OSB residential siding due to its ease of
installation and their preference for a material that has the "curb appearance" of real wood.
While WRC siding use is directly related to the selling price of the new home, the effect was found to be not significant. In fact,
WRC siding occurs in nearly equal proportions (square foot basis) on new homes across all price ranges. This suggests that
WRC is more readily accepted by contractors building new lower-end homes. This trend conflicts with builders’ perception
that WRC siding is a more appropriate product for high end houses (over $200,000) than for low-end houses, Table 2. This
shift in use seems to indicate that quality problems and low prices are actually undermining WRC’s competitive position in the
market.
The study results indicate that WRC manufacturers should make a concerted effort to upgrade the quality of their products. In
particular, the survey results suggest that manufacturers address issues dealing with product consistency and uniformity.
Improving WRC siding’s product consistency and uniformity, or creating a high-grade branded WRC residential siding
product, will improve the perception that builders have of WRC’s image and appearance. In return, an improved, high-end
WRC residential siding product may warrant a premium price in the marketplace.
Promotional efforts should focus on elevating builders’ poor perceptions of WRC in terms of its cost and maintenance. For
example, exterior siding products can be pre-finished with a high grade stain or primer using a reliable and consistent
application process. In addition, exterior siding products should be grade-consistent and not shipped in a green condition.
Third, promotional literature addressing long-term maintenance issues should be developed. This literature should accompany
every lift of WRC sold and should discuss the proper method of installing WRC residential siding.
Finally, WRC siding manufacturers, wholesalers, and retailers should make a strong effort to avoid price competition. The
results of this study indicate that price competition conflicts with builders’ perception of a residential siding product’s quality in
terms of both image and appearance. This conflict between low price and a high quality image has likely decreased its demand
among high-end home builders while at the same time increased demand among lower-end home builders. Ironically, this shift
in the market demand from high-end homes to low-end homes, while increasing overall sales of WRC siding, has resulted in
lower overall profit margins for WRC siding manufacturers, wholesalers, and retailers.
The results of this project are presented in CINTRAFOR Working
Paper No. 56