Many sales of major appliances are bought by building contractors for installation into new homes. This is indicative of the severe vulnerability of appliance sales to housing starts. When housing activity falters, appliance goods manufacturers will be hurt as well. Major retailers receive volume shipments from manufacturers to their warehouses. Replacement demand accounts for three-fourths of all purchases.
Housing starts are a source of demand for manufacturers.
In fact, each new housing start converts to 3 or 4 major new appliance sales for manufacturers. The major appliance business is basically saturated. Therefore, sales will normally come from replacement units that are no longer useful or repairable to consumers. Manufacturers receive an extended boost from new housing starts. Contractors often buy multiple appliance units for each house that is built.