The Home Improvement Research Institute (HIRI) has forecasted consumer spending on home improvement products will steady after two years of extreme demand following the COVID-19 pandemic. Rising inflation, reduced real household income and completed projects led HIRI to forecast that overall consumer market sales will increase by 2.8 percent 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 biannual Home Improvement Products Market Forecast.
Looking at growth over the last 10 years, the 2.8 percent increase reflects a healthy market. In 2020 and 2021 alone, consumer spending on home improvement soared to 15 percent and 13.3 percent, respectively, as homeowners invested time and money into their spaces that served as homes, offices, schools, gyms, and more.
“The extreme increase in demand for home improvement products that we witnessed because of the pandemic was bound to calm sooner or later,” said HIRI research director Matthew Craig. “While consumer spending is easing slightly on home improvement products, it is important to emphasize that any future boost is compounded on previous unprecedented growth. The market is still performing very well.”
HIRI cites differing economic circumstances and homeowner needs as reasons for the shift in consumer demand. This year, households are seeing real income decline as inflation climbs and stimulus payments recede. The Forecast predicts U.S. real disposable income to decline by 3.5 percent in 2022 after climbing 2.2 percent in 2021.
For those left unaffected, disposable funds are expected to be directed toward hobbies or other major purchases, as many report pandemic-era projects being brought to 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, the Forecast predicts the total building products market to grow by 4.2 percent in 2022, with the consumer market growing by 2.6 percent and the professional market growing by 7.9 percent. Between 2024 and 2026, the consumer market is expected to average about 3.2 percent growth, and the professional market to average around 4.8 percent growth for the same period. This projection highlights a significant rise in contractor activity as well as an overall continued interest in home improvement in the coming years.
Since 1992, the Home Improvement Products Market Forecast has provided the home improvement industry’s only product-focused size of market study with five-year forecasts for the consumer and professional markets. Product category–level detail is provided for the consumer market and, since 2018, for the professional market. Geographic detail is also provided for the nine census divisions with annual estimates at the state level. The Forecast is released in the spring (Q2) and fall (Q3) exclusively to HIRI members. For more information, visit hiri.org.