The Home Improvement Industry 2022 Year in Review

The Home Improvement Industry 2022 Year in Review

Dec 14, 2022

The COVID-19 home improve­ment boom was bound to slow down even­tu­al­ly. After two years of dou­ble-dig­it mar­ket growth, eco­nom­ic pres­sures are expect­ed to stall growth of cat­e­go­ry activ­i­ty over the next year.

Indus­try experts are torn regard­ing the expect­ed sever­i­ty of the prob­a­ble 2023 reces­sion. Despite over­all eco­nom­ic uncer­tain­ty, HIRI research find­ings sup­port a stance that the home improve­ment mar­ket is still expect­ed to grow, albeit incre­men­tal­ly, through­out 2026 — which is good news for our industry.

While it’s impos­si­ble to know the exact out­come for the road ahead, we can take a look back on the path we’ve trav­eled so far. Here’s a quick recap of the events that defined 2022 for the home improve­ment industry:

1. Home improvement product purchases continued to soar at the start of the year.

At the start of 2022, home improve­ment prod­uct pur­chase rates in all cat­e­gories were still grow­ing sig­nif­i­cant­ly across the board. HIRI observed a large jump in retail sales fig­ures, indi­cat­ing the con­sid­er­able invest­ment home­own­ers con­tin­ued to make in their homes dur­ing the begin­ning of the year.

Activ­i­ty among pro­fes­sion­al con­trac­tors was espe­cial­ly high, as home­own­ers hired help to com­plete larg­er projects that had been delayed by the pandemic.

2. Material shortages caused professionals to try new products.

Unfor­tu­nate­ly, high demand mixed with lin­ger­ing sup­ply chain woes from the response to the pan­dem­ic ampli­fied long-last­ing chal­lenges for pro­fes­sion­al con­trac­tors, includ­ing mate­r­i­al delays and high prices.

By April 2022, covid con­cerns of home­own­ers was no longer one of the lead­ing caus­es of project delays. From April through year end, mate­r­i­al avail­abil­i­ty con­tin­ued to be the biggest cause of project delays. The sec­ond-most lim­it­ing fac­tor became mate­r­i­al prices.

What are the main reasons for project delays or stoppage?

By Novem­ber 2022, mate­r­i­al avail­abil­i­ty remains the top cause of project delays among 63% of Pro­fes­sion­als and mate­r­i­al prices remains the top lim­it­ing fac­tor among 35% of professionals.

Pro­fes­sion­als con­tin­ue to rank mate­r­i­al prices, mate­r­i­al avail­abil­i­ty, and labor as the top 3 chal­lenges fac­ing their businesses.

What are the top 3 challenges in your business today?
Webinar: HIRI Monthly Tracker: 2022 in Review and 2023 Outlook, WATCH

3. To keep costs low, more homeowners turned to DIY

The same sup­ply chain issues that plagued pro­fes­sion­al con­trac­tors left home­own­ers feel­ing unsat­is­fied with the cost or pace of their home improve­ment projects. 

In May 2022, home­own­ers report­ed high expens­es or con­trac­tor unavail­abil­i­ty as the top obsta­cles for hir­ing a pro­fes­sion­al. This is like­ly why most home­own­ers report­ed com­plet­ing at least one project them­selves instead of hir­ing help.

Because of labor chal­lenges, con­trac­tors still have strong lead times on projects and have yet to feel the full effects of chang­ing home­own­er sen­ti­ments towards hir­ing contractors.

By Novem­ber of 2022, more home­own­ers report­ed post­pon­ing projects alto­geth­er — 57% up from 42% in May.

Have you postponed or put off any home improvement or remodeling projects in the past month?

4. Consumers faced setbacks with smart-home devices.

In the midst of mate­r­i­al delays and sup­ply chain woes, con­sumers con­tin­ued to adopt a grow­ing num­ber of inter­net-con­nect­ed devices into their homes. How­ev­er, the rise of smart devices and low-cost mar­ket options has not come with­out setbacks.

A 2022 HIRI report unveiled that half of con­sumers pur­chas­ing con­nect­ed devices are also return­ing them. This was most­ly due to the devices not per­form­ing as adver­tised or dif­fi­cul­ties set­ting up the products.

HIRI Webinar: Modern Living and Enabling the Smart Home [Watch]

Addi­tion­al­ly, HIRI found that 50% of smart-home device own­ers have expe­ri­enced an inter­net issue with one or more of their devices. Smart light­bulb, sprin­kler sys­tem, smoke detec­tor and plug own­ers encounter the most prob­lems on aver­age. When reliant on con­nec­tiv­i­ty, even the least trou­ble­some smart home devices caused prob­lems for house­holds, man­u­fac­tur­ers and retail­ers alike in 2022.

So, what’s next?

Infla­tion and a prob­a­ble 2023 reces­sion will affect how much home­own­ers spend on home improve­ment going forward.

Ana­lysts fore­cast total home improve­ment prod­ucts mar­ket growth to decel­er­ate from 7.2% in 2022 to 1.5% in 2023, with the con­sumer and pro­fes­sion­al mar­kets grow­ing by 0.6% and 3.6%, respectively.

Look­ing through a greater eco­nom­ic lens to deter­mine the hous­ing mar­ket out­look, the Nation­al Asso­ci­a­tion of Home Builders’ Danush­ka Nanayakkara-Skilling­ton pre­dicts that we will see a mild reces­sion with sig­nif­i­cant chal­lenges to builders, how­ev­er, noth­ing on the scale of the 2008 U.S. recession.

We advise read­ers to not be scared at the thought of a poten­tial reces­sion and to con­tin­ue to take advan­tage of oppor­tu­ni­ties for grow­ing their busi­ness­es through­out the near future. The impacts are like­ly to reset cat­e­go­ry growth tra­jec­to­ries onto paths sim­i­lar to pre­vi­ous, 2019 forecasts.

Need fur­ther insight to help guide your prod­uct, chan­nel, mar­ket­ing, and sales teams? HIRI mem­bers have on-demand access to the lat­est mar­ket con­di­tions and insights among home improve­ment cus­tomers all year long. Book your con­sul­ta­tion to learn more about becom­ing a HIRI member.

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