HIRI expects further decelerated spending
The Home Improvement Research Institute (HIRI) has forecasted the current national inflation bulge to continue to decelerate home improvement spending.
Growth in the total home improvement products market is expected to decelerate from 7.2% in 2022 to 1.5% in 2023, with the consumer market growing by 0.6% and the professional market growing by 3.6%.
Recent home improvement product market growth appears to have peaked in 2021 at 15.8%, driven by surges in demand for home renovation during the height of the COVID-19 pandemic, HIRI said.
Rising prices on core personal consumption expenditures are eroding households’ real income growth and slowing consumer spending, including on home improvement projects.
While wages across the nation are slowly increasing, they have not yet outpaced the impacts of inflation.
HIRI predicts that core prices will continue to rise, at least in the short term. A softening in demand is expected to ease price pressures over the coming months, and core PCE prices are expected to decline slowly over the next year.
“After two years of double-digit growth in the home improvement market, economic pressures are expected to slow category activity next year,” said HIRI Operations Director Pam Heidel. “However, the market is still expected to grow, which is good news for our industry.”
Consumer growth is expected to slow considerably in 2023 given that many homeowners recently brought renovation projects to completion during the pandemic. HIRI estimates consumer market sales to advance by 0.6% in 2023 to $386 billion and for growth to average 2.2% 2024–26.
HIRI has also broken down forecasted growth by product category, where it can be assumed that many products sought out at the consumer level are related to DIY projects.
Top-growing merchandise lines for consumers
Nominal dollar growth rates between 2022 and 2026:
- Lawn and garden equipment and supplies: 4.8%
- Nursery stock and soil treatments: 4.0%
- Paint and preservatives: 3.8%
- Roofing and supplies: 3.7%
- Gypsum and specialty boards: 3.6%
- Soft-surface floor coverings: 3.6%
- Hard-surface floor coverings: 3.2%
HIRI projects professional market sales will grow by 10.2% in 2022 and slow to 3.6% in 2023.
As pandemic-driven demand eases over the coming years, growth of professional market sales is expected to average 3.2% 2024–26.
The most in-demand projects requiring professional contractors can be presumed by the growth of specific categories over the coming years.
Top-growing merchandise lines for professionals
Nominal dollar growth rates between 2022 and 2026:
- Roofing and supplies: 7.5%
- Gypsum and specialty boards: 7.3%
- Hard-surface floor coverings: 6.8%
- Lawn and garden equipment and supplies: 6.0%
- Kitchen and bath cabinets: 5.9%
- Windows, skylights and patio doors: 5.9%
- Insulation and weatherization products: 5.9%
“It’s important to keep up with past and future home improvement data because it helps remind our industry of the big picture,” Heidel said. “No matter which direction things may be turning, HIRI will supply the research needed to help our members make informed decisions.”