The historical geographic concentration of housing in the United States clashes with current and projected lumberyard revenue. A geographic disconnect between lumber demand and concentrations of lumberyards suggests better growth opportunities for current and prospective channel participants in the South and West.
To further examine the ranking results click on the 3 figures, move the rank filter and hover over a specific location.
Figure 1 in the interactive visualization above shows county level rankings of lumberyard location count. The top ranked counties in terms of lumberyard locations tend to be clustered along the North Atlantic coast and Great Lakes where new construction and lumber demand was most heavily concentrated throughout the second half of the 20th century. Overall, 33 of the 100 counties most densely populated with lumberyards are in the Northeast census region and 22 are in the Midwest.
By contrast, as shown in Figure 2, counties ranking highest in 2015 lumberyard revenues tend to be further south and west, particularly in Florida, Texas and Southern California. This is driven by the trend from the 1990s to the present of increased migration to the sunbelt states. For lumberyard revenues, 35 of the top 100 counties ranked by channel revenue are in the South Atlantic division, 16 are in the West South Central division and 14 are in the Pacific division.
Florida and Texas Ripe for Expansion
The implications of this disconnect are shown in Figure 3 which calibrates each county’s lumberyard revenue per location by county. The figure shows that county rankings follow and magnify the general pattern of the revenue rankings. The states of Florida and Texas look particularly strong with 5 of the top 10 counties in Florida and 3 of the top 10 counties in Texas. This analysis suggests Florida and Texas along with the South Atlantic, West South Central, and Pacific divisions more generally, provide a more relatively hospitable competitive environment for existing lumberyards and those looking to expand into these markets. With fewer dealer outlets serving a given level of demand, channel participants should be able to enjoy opportunities to scale revenue and a higher degree of pricing power. These forces should allow them to achieve greater margins and encourage other companies to enter these regions seeking to capture their fair share of market growth.