HIRI Predicts Continued Growth for Home Improvement Products Market, with Ease in Consumer Spending Through 2026
The Home Improvement Research Institute has forecasted consumer spending on home improvement products will steady after two years of extreme demand following the COVID-19 pandemic. Rising inflation, reduced real household income and completed projects led HIRI to forecast that overall consumer market sales will increase by 2.8 percent in 2023 to $382.5 billion. This research was conducted in partnership with IHS Markit and released to HIRI members at the end of Q1 in the biannual Home Improvement Products Market Forecast.
Looking at growth over the last 10 years, the 2.8 percent increase reflects a healthy market. In 2020 and 2021 alone, consumer spending on home improvement soared to 15 percent and 13.3 percent, respectively, as homeowners invested time and money into their spaces.
“The extreme increase in demand for home improvement products that we witnessed because of the pandemic was bound to calm sooner or later,” says HIRI Research Director Matthew Craig. “While consumer spending is easing slightly on home improvement products, it is important to emphasize that any future boost is compounded on previous unprecedented growth. The market is still performing very well.”
HIRI cites differing economic circumstances and homeowner needs as reasons for the shift in consumer demand. This year, households are seeing real income decline as inflation climbs and stimulus payments recede. The forecast predicts U.S. real disposable income to decline by 3.5 percent in 2022 after climbing 2.2 percent in 2021.
For those left unaffected, disposable funds are expected to be directed toward hobbies or other major purchases, as many report pandemic-era projects being brought to completion. However, contractor-led projects are expected to see an uptick as homeowners become comfortable allowing professional help into their living spaces again.
In the short term, the forecast predicts the total building products market to grow by 4.2 percent in 2022, with the consumer market growing by 2.6 percent and the professional market growing by 7.9 percent. Between 2024 and 2026, the consumer market is expected to average about 3.2 percent growth, and the professional market to average around 4.8 percent growth for the same period. This projection highlights a significant rise in contractor activity as well as an overall continued interest in home improvement in the coming years.
The forecast further breaks down this growth by segmented merchandise line.
Top-growing merchandise lines for professionals
Compound annual growth rate for the professional market between 2022 and 2026:
- Dimensional lumber and boards: 7.6 percent
- Doors and molding: 7.5 percent
- Plywood and related products: 7.2 percent
- Siding and exterior trim: 6.4 percent
- Electrical supplies: 6.3 percent
- Lawn and garden equipment and supplies: 6 percent
- Paint sundries and other supplies: 5.8 percent
Top-growing merchandise lines for consumers
Compound annual growth rate for the consumer market between 2022 and 2026:
- Lawn and garden equipment and supplies: 6 percent
- Dimensional lumber and boards: 5.1 percent
- Doors and molding: 5 percent
- Electrical supplies: 4.8 percent
- Nursery stock and soil treatments: 4.8 percent
- Plywood and related products: 4.6 percent
- Siding and exterior trim: 4.2 percent