Entering 2021, many within the home improvement industry proceeded with caution. Even though 2020 was rife with heartache, turmoil and disruption at a global level, home improvement was one of the few shining stars. Homeowners took their forced time at home and decided to make it productive by tackling home projects and tasks they had been intending to do but had yet to find the time. They also took on unplanned projects in response to their new way of life, health concerns and changing uses of the home. This increased time at home, long project lists and a shift in disposable income led to a surge in DIY home improvement activity and record sales for many within the industry. Led by the surge in consumer spending, the Home Improvement Research Institute (HIRI) noted a 13.3 percent growth in home improvement product sales for 2020, an astounding number considering GDP dropped by nearly 3.5 percent.
With the success of 2020 behind us, many asked not if the other shoe will drop, but how heavy will it drop? Most expected relatively strong continued interest in home improvement and building, but compared to 2020, a modest uptick at best. Looking back at the past year, now we saw 2020 was just the start. In preliminary estimates for 2021, HIRI expects another 13 percent growth for all of 2021. To put that into perspective, the home improvement products market will have increased by 28 percent over a two-year span, a feat nearly unheard of in an industry this large and established.
HIRI noted a 13.3 percent growth in home improvement product sales for 2020, an astounding number considering GDP dropped by nearly 3.5 percent.
While 2020 growth was driven very much by consumers, 2021 was the year of the pro. With part of 2020 stymied from the pro perspective due to the lockdowns throughout much of the country, demand for a pro’s time was strong in 2021. With a glut of demand from first-time homeowners, homebuyers moving to new markets and existing homeowners wanting changes to their home, pros’ books filled up quickly and timelines were extended as many contractors didn’t have enough time or workers to keep up with the number of projects coming in. This led to a constant source of product sales, leading to an estimated 18.2 percent increase in pro building material sales in 2021.
Strong demand for particular goods and services is never a bad thing, but it can cause some headaches along the way. The headaches in 2021 were felt by nearly all with a stake in home remodeling. Supply constraints have plagued many within the industry as manufacturers struggle to keep up with demand. While some categories have begun to subside, like lumber, others continue as a thorn in the side of pros and DIYers alike. Although the root causes of constraints are varied (component shortages, shipping delays, lack of labor, etc.), the outcome is the same: project delays, product shifts and inflation. When taking inflation into account, the “real” growth is closer to the 5 percent range compared to the 13 percent nominal growth we see overall.
Now in 2022, we approach with cautious optimism. Demand is still strong for home improvement among DIYers and pros and doesn’t seem to be slowing down. We don’t expect to see a third consecutive year of double-digit growth but instead settling into the 3 to 4 percent range we saw pre-pandemic. Indicators tell us that unless something significant happens, any retraction is unlikely. Throughout all of 2021, we’ve seen strong demand unlike what we’ve seen before of homeowners who are still planning on undertaking home improvement projects.
When taking inflation into account, the “real” growth is closer to the 5 percent range compared to the 13 percent nominal growth we see overall.
The housing market, while slowing from the peak, is still quite strong. Even with increased home prices, we have yet to see existing home inventory go up, indicating there is still room to grow. Home sales often lead to flurries of project activity as new purchasers rush to make a house their home. Alongside this, there is a contingent of homeowners who previously would have made a step-up home purchase, but have been priced out of the market and are instead reinvesting in their homes with the equity they amassed in the past 24 months.
HIRI projects flat to modest growth of DIY products sales in 2022 and 6 to 8 percent growth in pro home improvement product sales. Solid supply and demand, and lingering tailwinds, indicate we will continue seeing modest growth at this new market level for the year ahead.
The Home Improvement Research Institute (HIRI) is the only nonprofit organization dedicated to home improvement research. The organization empowers its members with exclusive, ongoing home improvement data and information for making better business decisions. Members are the home improvement industry’s leading manufacturers, retailers and allied organizations. Learn more at hiri.org.
Market Measure: The Industry’s Annual Report
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