A new gauge of residential remodeling activity, the U.S. Remodeler Index, offers several key insights about today’s remodeling and home improvement market. Chief among those insights: Remodeling pros expect 10 percent growth in 2021 coming off Q4 2020 where revenue growth was mixed—2 percent nationally, year-over-year.
Created by Qualified Remodeler magazine and John Burns Real Estate Consulting, the USRI measures remodeler sentiment for current activities, future or near-term activities, as well as consumer demand or ‘hotness.’ The aggregate Q4 2020 USRI reading across all segments was 63.5 out of 100, where any score over 50 is positive and anything over 60 is strong.
Four key takeaways from the report are:
- Project-volume growth was strong in the South and Midwest (+4 percent, respectively) during Q4 2020 while activity on the West and East Coasts slowed or leveled.
- A majority of remodelers (54 percent) report a growing backlog of projects.
- Project sizes are growing and clients are trading up to higher-priced products.
- Pros expect 10 percent revenue growth despite significant supply and labor constraints.
To quantify the potential market gains expected, a recent John Burns forecast estimates the overall size of the remodeling market to be $399 billion. This includes DIY and big-box sales. A 10 percent gain on the pro segment could amount to as much as $22 billion in new activity.
“Remodelers expect the industry to grow approximately 10 percent in 2021, showing strong demand amid unprecedented supply-chain problems,” says Todd Tomalak, senior vice president, John Burns Real Estate Consulting. “We’re excited to partner with Qualified Remodeler because these responses from their pro readership sheds much-needed light on the professional path to growth in remodeling. John Burns views pro big-project remodeling as one of the most exciting segments in the U.S. economy today.”
Segment tabulations demonstrate varying levels of confidence among pros.
- Full-service remodelers handle a wide range of job types from small to large. This group registered a score of 60.8 out of 100.
- Design-build remodelers design and manage large projects such as room additions and whole-house remodels. They registered a 63.1 reading.
- Home improvement pros—specializing in exterior and bath replacements—showed very strong market confidence with a USRI score of 72.7.
“Business sentiment from one pro segment to another can vary widely at any given time,” says Patrick O’Toole, co-owner of Qualified Remodeler. “Together with the analysts at John Burns, we’re confident in the sentiment revealed in these initial results for the USRI. Going forward, we aim to expand our responses to enable even more detail by segment, by region and eventually by metro area.”
