HIRI forecasts continued growth in the home improvement products market, with ease in consumer spending through 2026

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the Home Improvement Research Institute forecast that consumer spending on home improvement products would stabilize after two years of extreme demand following the COVID-19 pandemic. Rising inflation, shrinking real household income and completed projects have led HIRI to forecast that overall consumer market sales will increase by 2.8% in 2023 to $382.5 billion. This research was conducted in partnership with IHS Markit and released to HIRI members at the end of Q1 in the Semi-Annual Home Improvement Products Market Forecast.

Looking at growth over the past 10 years, the 2.8% increase reflects a healthy market. In 2020 and 2021 alone, consumer spending on home improvements soared 15% and 13.3%, respectively, as homeowners invested time and money in their spaces.

“The extreme surge in demand for home improvement products that we have seen due to the pandemic was bound to subside sooner or later,” says Matthew Craig, HIRI Research Director. “While consumer spending is down slightly on home improvement products, it’s important to stress that any future increases are compounded by unprecedented growth. The market is still doing very well.

HIRI cites differing economic circumstances and owner needs as reasons for changing consumer demand. This year, households are seeing their real income fall as inflation climbs and stimulus payments decline. Forecasts predict that real US disposable income will decline 3.5% in 2022 after increasing 2.2% in 2021.

For those not affected, available funds should be directed to hobbies or other major purchases, as multiple reports point to pandemic-era projects nearing completion. However, contractor-led projects are expected to see an uptick as homeowners become comfortable allowing professional help into their living spaces again.

In the short term, forecasts predict that the total building products market will grow by 4.2% in 2022, with the consumer market growing by 2.6% and the professional market by 7.9%. Between 2024 and 2026, the consumer market should experience average growth of around 3.2% and the professional market average growth of around 4.8% for the same period. This projection highlights a significant increase in contractor activity as well as continued general interest in home improvement in the years to come.

The forecast further breaks down this growth by segmented merchandise line.

Growing merchandise lines for professionals

Average annual growth rate of the professional market between 2022 and 2026:

  • Lumber and dimensional boards: 7.6%
  • Doors and moldings: 7.5%
  • Plywood and related products: 7.2%
  • Siding and exterior trim: 6.4%
  • Electrical supplies: 6.3%
  • Lawn and garden equipment and supplies: 6%
  • Sundries of paint and other supplies: 5.8%

Highest Growth Merchandise Lines for Consumers

Compound annual growth rate of the consumer market between 2022 and 2026:

  • Lawn and garden equipment and supplies: 6%
  • Lumber and dimensional boards: 5.1%
  • Doors and moldings: 5%
  • Electrical supplies: 4.8%
  • Nursery stock and soil treatments: 4.8%
  • Plywood and related products: 4.6%
  • Siding and exterior trim: 4.2%
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