Enting 2021, a lot in home improvement the industry proceeded with caution. Even though 2020 has been marked by heartache, turmoil and global disturbance, habitat improvement was one of the few shining stars. The owners took their forced time at home and decided to make it productive by tackling household projects and chores they had intended to do but hadn’t yet found the time. They also took unplanned measures projects in response to their new lifestyle, health concerns and changing uses of the home. This increase in time spent at home, long lists of projects and a shift in disposables the revenue has led to a surge in DIY activity and record sales for many in the industry. Led by the surge in consumer spending, Home improvement research Institute (HIRI) noted a growth of 13.3% IIn home improvement product sales for 2020, an astonishing number considering GDP which fell nearly 3.5%.
With the success of 2020 behind us, many are wondering not if the other shoe will drop, but how badly will it drop? Most expected relatively strong continued interest in renovation and construction, but compared to 2020, a slight increase at best. Looking back on the past year, now we have seen that 2020 is just the beginning. In preliminary estimates for 2021, HIRI expects an additional 13% growth for the whole of 2021. To put this in perspective, the market for home improvement products will have increased 28% over a two-year period, an almost unprecedented feat in such a large and established industry.
HIRI noted a 13.3% growth in home improvement product sales for 2020, an astonishing number considering the decline in GDP of almost 3.5%.
While 2020’s growth was largely driven by consumers, 2021 was the year of the pros. With part of 2020 locked in from a pro perspective due to shutdowns across much of the country, demand for pro time was strong in 2021. With a glut of demand whether it’s new homeowners, buyers moving to new markets, and existing homeowners looking to make changes to their homes, the pros’ books have been filling up fast and deadlines have been extended as many contractors did not have enough time or workers to keep up with the number of upcoming projects. This has led to a steady source of product sales, resulting in an estimated 18.2% increase in professional building materials sales in 2021.
High demand for particular goods and services is never a bad thing, but it can cause headaches down the road. The headaches of 2021 have been felt by almost everyone with an interest in home improvement. Supply Constraints have tormented many people in the industry as manufacturers struggling to meet demand. While some categories have begun to weaken, such as lumber, others continue to be a thorn in the side of pros and DIYers alike. While the root causes of the constraints are varied (component shortages, shipping delays, labor shortages, etc.), the result is the same: project delays, product changes, and inflation. Adjusting for inflation, “real” growth is closer to the 5% range compared to the 13% nominal growth we see globally.
Now in 2022, we approach with cautious optimism. Request is still going strong for home improvement among DIYers and pros alike and doesn’t seem to be slowing down. We don’t expect to see a third straight year of double-digit growth, but rather settle into the 3-4% range we saw before the pandemic. The indicators tell us that unless something big happens, any retraction is unlikely. Throughout 2021, we’ve seen strong demand unlike what we’ve seen before from homeowners who are still considering undertaking home improvement projects.
Adjusting for inflation, “real” growth is closer to the 5% range compared to the 13% nominal growth we see globally.
The housing market, while slowing from the peak, is still quite strong. Even with rising home prices, we have yet to see existing home inventory increase, indicating that there is still room to grow. Home sales often bring a flurry of project activity as new buyers rush to make a home their home. Along with this is a contingent of homeowners who would have previously made a step home purchase but were priced out of the market and are instead reinvesting in their home with the equity they have accumulated over the past 24 last months.
HIRI forecasts stable to modest growth in DIY product sales in 2022 and 6-8% growth in professional home improvement product sales. Strong supply and demand and continued tailwinds indicate that we will continue to see modest growth at this new market level for the year ahead.
The Home Improvement Research Institute (HIRI) is the only non-profit organization dedicated to home improvement research. The organization offers its members exclusive, ongoing home improvement data and information to make better business decisions. Members are major manufacturers, retailers and allied organizations in the home improvement industry. Learn more about hiri.org.
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