The Top 8 Demand Drivers for Home Improvement Products Purchases

Demand fore­cast­ing is an impor­tant part of stay­ing com­pet­i­tive in almost any line of busi­ness, and the build­ing prod­ucts indus­try is no exception.

Ana­lyz­ing var­i­ous demand dri­vers in dif­fer­ent mar­ket seg­ments enables you to shift busi­ness strate­gies and resources to work towards max­i­mized sales. 

Although not a per­fect prac­tice, demand fore­cast­ing will give you a leg up when it comes to your prod­uct devel­op­ment and mar­ket­ing efforts. And the more robust, rel­e­vant and refined mar­ket research you use for track­ing dri­vers and demand fore­cast­ing, the more accu­rate your sales pro­jec­tions will be.

Top Demand Drivers for Home Improvement Products

Demand fore­cast­ing isn’t so much about cal­cu­lat­ing the cur­rent mar­ket demand for a par­tic­u­lar prod­uct as it is about ana­lyz­ing indi­vid­ual demand dri­vers in order to make edu­cat­ed pre­dic­tions about what will hap­pen in the future.

There are numer­ous fac­tors that impact the home improve­ment indus­try — both for DIY home­own­ers and pro­fes­sion­als. These fac­tors also influ­ence what types of prod­ucts will be sought after, where, by whom and what fea­tures and traits buy­ers are like­ly to pri­or­i­tize when decid­ing to make purchases.

Here are eight of the most impact­ful demand dri­vers to account for in accu­rate demand fore­cast­ing for home improve­ment prod­ucts and build­ing materials:

1. National Housing Supply

An over­all under­stand­ing of the cur­rent U.S. Nation­al Hous­ing Sup­ply is essen­tial to under­stand­ing your prod­uct category’s demand dri­vers because of the cor­re­la­tion between sup­ply and demand. An under­stand­ing of the U.S. hous­ing sup­ply can be gen­er­at­ed by analyzing

• New Exist­ing Home Listings

• Exist­ing Home Sales

• New Build­ing Per­mits Issued

• New Build­ing Completes

The cur­rent state of the real estate mar­ket and oth­er devel­op­ment trends in an area will influ­ence demand for cer­tain build­ing mate­ri­als. If there is a high vol­ume of com­mer­cial or res­i­den­tial con­struc­tion growth tak­ing place, pro­fes­sion­als will be kept busy with upcom­ing projects, dri­ving demand for build­ing prod­ucts and mate­ri­als. Addi­tion­al­ly, pay atten­tion to spe­cif­ic hous­ing trends, such as trends in sus­tain­able hous­ing, hyper-local neigh­bor­hoods, and sim­pli­fied living. 

2. Homeowner Mobility

Home­own­er mobil­i­ty is an under­stand­ing of the fea­si­bil­i­ty and will­ing­ness of home­own­ers to move. An increase in home­own­er mobil­i­ty is often asso­ci­at­ed with an increase in exist­ing hous­ing sup­ply, while a decrease in home­own­er mobil­i­ty often shrinks sup­ply, putting pres­sures on the sup­ply and demand equilibrium.

HIRI’s Month­ly Eco­nom­ic & Indus­try Update cen­tral­izes data from the U.S. Cen­sus Bureau, Fan­nie Mae, FRED, HUD, The Con­fer­ence Board, and the Nation­al Asso­ci­a­tion of Real­tors regard­ing home­own­er mobil­i­ty, including:

• Home­own­er­ship Rate (see page 15)

• Con­sumer Con­fi­dence Index (see page 18)

• Exist­ing Home Sales (see page 28)

• Hous­ing Afford­abil­i­ty Index (see page 30)

• Home Pur­chase Sen­ti­ment Index (see page 31)

• Pend­ing Home Sales Index (see page 37)

3. Age of the Housing Stock

Espe­cial­ly when tak­en in tan­dem with an under­stand­ing of home­own­er mobil­i­ty, fac­tor­ing in the age of the hous­ing stock serves to add col­or to the prob­a­ble state of the home’s main­te­nance and repair needs.

Sim­i­lar­ly, if the avail­able hous­ing inven­to­ry in an area is old­er, you can project that the home­own­er demo­graph­ic will be need­ing upgrades. Whether they are DIY­ers or apt to afford & pre­fer to to hire pro­fes­sion­als for remod­els and ren­o­va­tions is anoth­er fac­tor that will influ­ence demand fore­cast­ing for your home improve­ment prod­ucts, depend­ing on if your brand holds greater share of wal­let among DIY­ers, Pros, or a mix of both.

4. Available Funds / Consumer Cash on Hand

Anoth­er demand dri­ver to con­sid­er as a man­u­fac­tur­er or retail­er in the home improve­ment indus­try is the dif­fer­ent con­sumer income lev­els among your tar­get demo­graph­ics. Indi­vid­u­als with more expend­able income can invest more fre­quent­ly and heav­i­ly in home remod­el­ing projects. 

Soci­etal influx­es of cash on hand in 2020 and 2021 cre­at­ed strong tail­winds for home improve­ment spend growth

Also avail­able to mem­bers in HIRI’s Month­ly Eco­nom­ic & Indus­try Update are fig­ures and analy­sis per­tain­ing to consumers

• Real Dis­pos­able Per­son­al Income (see page 8)

• Retail Sales (see pages 9 – 10)

• Unem­ploy­ment Rate and Jobs Added (see page 11)

As avail­able cash on hand changes, repri­or­i­ti­za­tion of cer­tain home improve­ment projects tends to occur, both as cash on hand increas­es and as cash on hand decreases.

Data from HIRI’s 2023 Month­ly Home Improve­ment Track­er, in part­ner­ship with The Farnsworth Group, pro­vides insight into home­own­ers cur­rent meth­ods of fund­ing home improve­ment and repair projects. 

Con­sis­tent­ly, the top response is exist­ing cash/​savings fol­lowed by cred­it cards.

5. Weather Patterns

Beyond eco­nom­ic met­rics and cus­tomer sen­ti­ments, inclement weath­er and nat­ur­al dis­as­ters can impact demand and should be account­ed for as pos­si­ble in your demand forecasting.

In cer­tain regions, weath­er events are a nor­mal occur­rence. For exam­ple, in places that are prone to storms and high winds, indi­vid­u­als have to invest more in roof repairs and main­te­nance sim­ply out of neces­si­ty. In areas with ample year-round sun­shine, land­scap­ing and gar­den­ing prod­ucts and ser­vices stay in demand longer.

6. Construction Related Legislation

Infra­struc­ture stim­u­lus bills, or the lack there­of, are anoth­er exam­ple. This type of leg­is­la­tion trans­lates into fund­ing that impacts the avail­abil­i­ty of projects and spend­ing capac­i­ty, par­tic­u­lar­ly for con­struc­tion pro­fes­sion­als. States or regions that are invest­ing in infra­struc­ture will like­ly wit­ness a greater amount of build­ing activ­i­ty in the future, which would dri­ve demand for products.

Fur­ther, changes to zon­ing poli­cies and build­ing codes impacts how devel­op­ers, archi­tects, and builders make deci­sions about where to build, what to build, and with what mate­ri­als to build.

7. Community Culture, Generational, and Regional Psychographics

Demand for spe­cif­ic prod­ucts will vary depend­ing on the needs, lifestyles and com­mon expe­ri­ences of home­own­ers in a cer­tain geo­graph­ic region. Some areas are known for incor­po­rat­ing a cer­tain style or look for both res­i­den­tial and com­mer­cial build­ings. Region­al­ly, there are dif­fer­ences in pop­u­lar land­scap­ing styles, for exam­ple, or there can be a wide­spread use of brick facades vs. cedar sid­ing. Some­times, these types of fea­tures are even reg­u­lat­ed by city ordi­nances or home­own­ers’ asso­ci­a­tions (HOAs).

It’s ben­e­fi­cial to know what, if any, defin­ing char­ac­ter­is­tics exist with­in regions and mar­kets where your orga­ni­za­tion is active. 

Under­stand­ing region­al dif­fer­ences in demand and sup­ply for var­i­ous build­ing prod­ucts, based on region­al fac­tors and vary­ing region­al psy­cho­graph­ics, will enhance your mar­ket­ing, sales, and chan­nel team’s abil­i­ty to speak to the hearts and minds of the mod­ern con­sumer and the mod­ern Pro customer.

8. Current Events

Addi­tion­al­ly, the cur­rent events and nation­al move­ments that impact social norms is an exam­ple of a cur­rent event that had rip­ple effects on every aspect of life, includ­ing the con­struc­tion indus­try. Demand for touch­less tech­nol­o­gy and automa­tion pro­lif­er­at­ed. Indi­vid­u­als became increas­ing­ly con­cerned about indoor air qual­i­ty (IAQ) and oth­er healthy home fea­tures. Events or occur­rences such as that — whether nation­wide or con­tained to a sin­gle state or region — will con­tin­ue to play a role in dri­ving demand for build­ing prod­uct purchases.

What is the Purpose of Demand Forecasting?

For build­ing mate­ri­als man­u­fac­tur­ers and retail­ers, demand fore­cast­ing involves pro­ject­ing what the com­pet­i­tive envi­ron­ment will look like in the short and long term. That includes demand among pro­fes­sion­als, as well as home­own­ers who pur­chase home improve­ment prod­ucts for DIY projects.

In order to make these pro­jec­tions, home improve­ment orga­ni­za­tions look to data sur­round­ing key dri­vers of demand in the home improve­ment indus­try and cus­tomer seg­ments specif­i­cal­ly. (And as you know, much of this infor­ma­tion is hard to come by for home improve­ment products!)

Demand fore­cast­ing gives you insight into the mar­ket and lets you plan accord­ing­ly. Your team will be bet­ter posi­tioned to make deci­sions about where to focus and invest resources. Addi­tion­al­ly, you can apply the data at var­i­ous stages of the prod­uct devel­op­ment process and to deter­mine where you should direct your teams’ efforts.

How Do You Conduct Demand Forecasting and Apply the Outcomes?

It’s impor­tant to note that demand dri­vers shouldn’t be ana­lyzed in a vac­u­um. Mul­ti­ple dri­vers can come into play, along­side oth­er fac­tors, such as where your com­pa­ny has an estab­lished pres­ence, your dis­tri­b­u­tion chan­nels, and your pri­ma­ry competition.

There are var­i­ous fore­cast­ing mod­els you can use that take into account a mul­ti­tude of rel­e­vant fac­tors relat­ed to demand for con­struc­tion mate­ri­als and equip­ment. Your com­pa­ny can then track and mon­i­tor those demand dri­vers that have a direct influ­ence on your busi­ness, which will give you a clear­er pic­ture when pro­ject­ing sales and iden­ti­fy­ing opportunities.

As a result, your com­pa­ny can dynam­i­cal­ly adjust your invest­ment, prod­uct devel­op­ment, and mar­ket­ing strate­gies based on data-dri­ven predictions.

One of the keys to suc­cess­ful demand fore­cast­ing is hav­ing access to the right data. The Home Improve­ment Research Insti­tute offers a wide array of indus­try research and insights that is avail­able to mem­bers on demand. This data can be used to help your com­pa­ny make rel­a­tive­ly accu­rate and valu­able fore­casts about con­sumer demand in the build­ing prod­ucts market.