2020 was a year rife with heartache, turmoil, and disruption at a global level. However, despite the COVID-19 pandemic (or perhaps, because of it), demand and sales for home improvement products increased. The result was explosive growth for the home improvement category throughout 2020 – 13.3% to be exact. However, as the page turned into the new year of 2021, many within the industry proceeded with caution.
Like most things around the beginning of 2021, the outlook for the home improvement market was uncertain. With the success of 2020 in the rearview, most could not fathom another year of such unprecedented growth. However, looking back at the past year, it is clear that 2020 was just the beginning. According to preliminary estimates for 2021, the industry grew another 13% for the entire year. To put that into perspective, the home improvement product industry will have increased by 28% over a two-year span, a feat nearly unheard of in an industry already quite large and established.
So, what did we learn from this year of exceptional growth? Here are HIRI’s top three highlights from the home improvement industry in 2021:
According to Liza Hausman, Vice President of Industry Marketing at Houzz, more than half of homeowners took on projects themselves in 2020. However, as most of these improvements wound toward completion and people became more comfortable with the idea of having others in their home, the demand for professional contractors increased rapidly. In fact, professional contractors reported an estimated 18.2% increase in product sales in 2021.
While the strong demand for home improvement was welcomed wholeheartedly among the industry, the lasting impacts of the pandemic are still present and real. Supply constraints have plagued many within the industry as manufacturers struggle to keep up with demand. Although the root causes of constraints are varied (component shortages, shipping delays, lack of labor, etc.), the outcome is the same: inflation. When taking inflation into account the “real” industry growth is closer to 5%, compared to the 13% nominal growth seen overall.
It’s no shock that housing is red-hot right now. Even with increased home prices, there has yet to be an increase in home inventory, indicating that there is still room for the market to grow. This leads to a two-fold uptick for home improvement. On one hand, home sales often lead to flurries of project activity as purchasers rush to make their new house a home. On the other hand, it results in homeowners getting priced out of the market and reinvesting in their current homes with renovations.
As we move into the new year, it is impossible to predict what is to come, not only for the home improvement industry but the global market as well. However, solid fundamentals, continued demand, and lingering tailwinds indicate another year of above-par home improvement activity in 2022.
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