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News & Press: HIRI News

Expected 4.9% Growth in Home Improvement Products Market in 2017

Friday, September 22, 2017   (0 Comments)
Posted by: Matthew Craig

HIRI/IHS Markit forecast expects 4.9% growth in home improvement products market in 2017 after a strong 5.5% in 2016.

Total home improvement products sales are expected increase 4.9% in 2017 to $365 billion in total sales. The Professional Market is expected to increase 3.4% in 2017 over 2016 and the Consumer Market will see a sales increase of 5.5%.

 

Growth is expected to continue over the next few years at a steady pace with total growth expected to be 4.8% in 2018, while 2019 looks to grow another 4.1%. 

 

The National Economic Outlook

  • Real GDP growth bounced back in the second quarter of this year, rising at a solid annualized rate of 3.0%, compared with an anemic 1.2% in the first quarter. We expect full-year 2017 GDP growth of 2.1%, accelerating to 2.7% in 2018.
  • Real core construction spending—the sum of single-family and multifamily residential, state and local government, and private nonresidential spending—fell in the second quarter and is expected to drop again in the third. This weakness will be temporary, and we expect all four categories to bounce back by the fourth quarter.
  • Consumer spending will remain an engine of economic growth, supported by rising employment, real disposable incomes, and household wealth. Income tax cuts in 2018 are expected to fuel an acceleration in spending growth to 3.0% from 2.6% this year.
  • Business fixed investment has posted two consecutive quarters of solid growth, after five quarters of zero growth. Growth in the second half of the year is expected to be equally strong.
  • Strengthening world demand and the fading effects of the strong dollar have boosted exports. Stronger domestic demand—particularly for capital goods—has strengthened import growth.
  • We anticipate that the Federal Reserve will begin to contract its $4.5-trillion balance sheet at the upcoming September meeting, and increase the federal funds rate one more time in mid-December.
  • While it is too early to assess the effects of Hurricanes Harvey and Irma, it will likely increase the volatility of growth in the second half of 2017, with reduced growth in the third quarter offset by a boost to growth in the fourth.

 

Outlook for the Home Improvement Products Market

  • Incorporating data from government sources that have been revised since our March 2017 report, the growth of home improvement product sales is now estimated to have been somewhat stronger in 2015 (6.0% vs. the previously estimated 5.3%) and slightly slower in 2016 (5.5% vs. 5.9%).
  • The home improvement products market continues to outperform many other sectors of the economy, and rising prices are boosting the sales value of certain building materials. We have revised our forecast for 2017 sales upward compared with our March report, with total sales in nominal dollars now projected to increase 4.9% to $365 billion. Consumer Market sales are expected to increase by 5.5% in 2017 and Professional Market sales by 3.4%. 
  • The effects of stronger real income gains in the macroeconomic forecast for 2018 will be offset somewhat by a further slowing of the growth of existing home sales, and we project growth of home improvement product sales in 2018 near the pace of 2017. Total sales are forecast to increase 4.8% in nominal dollars to $381 billion. 
  • We expect the growth of home improvement product sales to slow slightly over the following three years, with growth averaging 3.8% in 2019 to 2021. Consumer Market growth will be stronger compared to Professional Market growth as existing home sales, which are an important driver of major improvements, are projected to decline each year by 1-2%. 

 

Growth rates of market size by segment for the current year and 5-year historical and forecast periods are as follows:

 

 

2012-2016

2017

2018-2021

Current prices:

 

Consumer Market

5.2%

5.5%

4.4%

Professional Market

6.4%

3.4%

2.9%

Total

5.5%

4.9%

4.0%

Constant prices:

Consumer Market

4.9%

4.9%

3.2%

Professional Market

5.2%

0.4%

1.5%

Total

5.0%

3.7%

2.7%


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