The Home Improvement Research Institute (HIRI) has forecasted that inflation will continue to decelerate home improvement spending. Growth in the total home improvement products market is expected to decelerate from 7.2 percent in 2022 to 1.5 percent in 2023, with the consumer market growing by 0.6 percent and the professional market growing by 3.6 percent. This research was released to HIRI members in September in the biannual Home Improvement Products Market Forecast.
Impact of Inflation
Recent home improvement product market growth appears to have peaked in 2021 at 15.8 percent, driven by surges in demand for home renovation during the height of the COVID-19 pandemic. Today, rising prices on core personal consumption expenditures are eroding householdsā 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.
āAfter two years of double-digit growth in the home improvement market, economic pressures are expected to slow category activity next year,ā said Pam Heidel, operations director for HIRI. āHowever, the market is still expected to grow, which is good news for our industry.ā
Consumer Market
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 percent in 2023 to $386 billion and for growth to average 2.2 percent 2024ā26.
HIRI further breaks down this 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%
Professional Market
HIRI projects professional market sales will grow by 10.2 percent in 2022 and slow to 3.6 percent in 2023. As pandemic-driven demand eases over the coming years, growth of professional market sales is expected to average 3.2 percent 2024ā26.
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%
Since 1992, the Home Improvement Products Market Forecast has provided the home improvement industryās only product-focused size of market study with five-year forecasts for the consumer and professional markets. Product category 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.