This monthly tracker surveys homeowners to learn what they see, think, and are doing right now in the home improvement arena. Findings also cover how projects are being completed, how often they are delayed, top challenges to starting home improvement projects and more.
As of findings from March of 2023, the majority of homeowners feel it is a bad time to start a large remodeling project. This is defined as any project over $5,000.
The number of homeowners with negative sentiments towards larger remodeling projects has remained constant for the entire first quarter of 2023, ranging from 52 – 57% each month.
Interestingly, January sentiments were the worst, at 57%, while negative sentiments towards starting remodeling projects costing more than $5,000 has softened over the last 2 months.
Further, the number of homeowners with positive sentiments towards starting smaller remodeling projects remains high, at 44% as of March 2023. This positive sentiment reflects DIY and DIFM attitudes towards any home improvement project under $5,000.
These factors combined signal that repair and maintenance demand will remain high while discretionary projects are liable to be postponed until consumer sentiments surrounding inflation, personal wealth, and cash on hand are improved.
In the specific context of Home Improvement, since the primary source of funding for remodeling projects is cash/savings, a decrease in personal savings rates is indicative of future demand declines.
While consumer savings rates were high in 2020 and 2021, peaking at 33.8% in April of 2020 and then 26.3% in March of 2021, current personal savings rates in 2023 have shrunken.
According to estimates released by the Bureau of Economic Analysis on March 31, the personal savings rate is currently 4.6%, in contrast to a 27.6% personal savings rate in March 2021, at the height of the covid-19 stimulus releases. The current personal savings rate of 4.6% is roughly half of the historical median (8.7%) which is the median from 1960-present.
Further, the current personal savings rate is below the 12 month change rate in the consumer price index (CPI). This reversal in 2022 and 2023 compared to 2020 and 2021 is greatly driving the slowdown in consumer demand for home improvement projects and products back to what are more in-line with 2 – 3% CAGR in the home improvement and building products industry.
As discretionary household budgets shrink once excess savings from 2020 and 2021 are fully spent, discretionary project demand will likewise decrease. Repair and maintenance spending will drive revenue for the home improvement industry, as there is not an indication that consumers will opt to defer repair and maintenance expenses.
As homeowners recognize their budgets are looking tighter and they have fewer discretionary funds to leverage for the home improvement projects they want to do, they are increasingly turning to DIY, rather than DIFM.
In March of 2023, 78% of homeowners opted to DIY because it was cheaper if they did the work, up from 67% just two months prior, in January.
For DIFM homeowners who are still opting to hire a contractor, the top challenge during their selection process continues to be that contractors are “too expensive,” followed closely by the Pro being too busy and not available in the desired timeframe.
We will be unpacking more behaviors and sentiments in greater depth for HIRI members via two data-packed webinars covering findings from our Q1 2023 Home Improvement Project Activity Tracker and insights from industry experts.
Anyone can register for the April 20th, 2023 webinar, which will be a panel discussion with industry experts Danny Lipford, Dave King, and Eric Voyer sharing both their data and perspective.
(Open to Members and Non-Members)
Members can register for the April 27th, 2023 webinar as well to gain an understanding of how homeowners are currently approaching home improvement in 2023.
(Open to Members)
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