It appears the spike in demand for swimming pools has begun to reset to pre-Covid levels. Across the board, pool stocks are sliding on a scale to indicate that the pandemic-driven market for building a pool may be over.
Many of the economic conditions that created a spike in demand have begun to recalibrate as more and more Americans are returning to the office. Limited options to travel helped spur pool sales which led to an increase in revenue in that sector. Those quarantine conditions are now evaporating as many countries have begun to lift their Covid-19 restrictions.
Consumer Demand is Down
Demand appears to have decelerated from previous years according to analysts. "Consumer inquiries are slower this year than at the height of the pandemic. The number of homeowners inquiring about building a pool appears to be roughly half of what is was last spring. It's about level with pre-Covid demand." - Joe Trusty, CEO of PoolContractor.com
This jibes with what pundits are seeing from a number of fronts and could finally signal the pop of the pandemic pool bubble. It’s not just builders and industry analysts who see a change in this year's numbers, manufacturers are also reporting a decline in sales.
Stock prices for some of the largest publicly held pool manufacturers and distributors are also down substantially for the year. Latham Group (SWIM) grew by 56% to $630.5 million last year, 2022 paints a completely different picture from this year's forecast. Year to date their stock is down -47.66%. PoolCorp (POOL), another significant publicly-traded company is down -25.41% YTD.
Limited options for travel amidst quarantine conditions caused a perfect storm for a spike in interest from consumers. Suddenly, summer in the backyard didn’t seem like such a bad idea; provided one could still build a pool.
While pool sales were up significantly over the past two years, many pool builders were unable to fully capitalize on the surge in demand due to issues with getting supplies and materials in a timely fashion. A lack of available labor also became a major pain point for both builders and consumers as the Covid-19 pandemic progressed. Concerns this year are the following:
- Inflation is rising and consumer confidence about buying a pool is decelerating.
- Higher construction costs for building a swimming pool.
- Resurgence in travel in tourism means less discretionary dollars spent on pools in '22-'23.
With the country finally getting back to a “business-as-usual” attitude after Omicron hit the media, many consumers finally have the option to travel again. After a two-year hiatus, one of the hardest-hit industries was travel and tourism. Expect a resurgence in this sector in 2022 through 2023 and the converse to hold true about new pool construction.
Building a Pool Has Gotten More Expensive
Building a pool in 2022 has suddenly become a much more expensive proposition than in years past which could effectively be pricing many consumers out of the market. According to PoolCost.com the average cost of a swimming pool has gone up roughly 30% over the past two years.
Consumer interest is cyclical in nature when it comes to demand for pools. The 2008 recession saw hundreds of pool companies fall casualty of the mortgage crisis. While nowhere near the scale of the conditions in '08 — many analysts predict consumers could be looking at another recession.
Contributing factors for declining sales:
- The U.S. is no longer under quarantine and consumers have the option to travel once again.
- Rising construction costs due to inflation are pricing a large percentage of consumers out of the market to build a swimming pool.
- A rise in interest rates to combat inflation has begun, this is bound to affect consumer spending.
- Builders are already inundated from contracts they sold the previous year and are marketing less aggressively to consumers.
While there is still the ’22 pool season to look forward to and existing pent-up demand from consumers who were unable to get a pool built — the number of homeowners seeking to build a pool from ‘23-’24 is expected to drop significantly. Consequently, this season could very well be a calm before the storm in terms of declining demand.