June 2, 2023
During the pandemic, Americans became ultra-focused on upgrading their homes, taking on remodeling and DIY projects in record numbers. But as recession fears mount, more homeowners are putting on the brakes and showing less willingness to dole out large amounts of money on home improvement projects.
New data this week shows home improvement giants like Lowe’s and Home Depot posting lower profits. These firms also are downgrading their sales outlooks for the year. Home improvement experts say consumers are becoming jittery about the economy and are moving from large-scale remodels to smaller, cheaper projects—or just scrapping their renovation plans altogether. Consumers have a case of the “home improvement blues,” Neil Saunders, a retail expert and managing director at Global Data, reportedly said this week.
Despite several possible reasons for the remodeling slowdown, it won’t be a bust, experts say. One reason is that homeowners often remodel before and after moving. As home sales remain slow this spring, there may be fewer new homeowners to make these remodeling changes—at least for now, says Jessica Lautz, deputy chief economist and vice president of research at the National Association of REALTORS®.
Elevated prices also may be causing homeowners to back away from remodeling, as the median price for a home improvement project surged to $22,000 in 2022, a record high and a 22% jump from 2021, according to the 2023 U.S. Houzz & Home Study(link is external). Labor shortages are continuing to drive up renovation costs and timelines, according to the second-quarter reading of the Houzz Renovation Barometer(link is external), which is based on responses from about 1,500 home improvement firms. Ninety percent of survey respondents reported ongoing delays for cabinetry, indoor furniture, windows and lighting fixtures.
As we come out of the pandemic, people have more activities to engage in outside the home, removing some of the urgency to remodel that owners felt when they were stuck at home. The pandemic-fueled remodeling boom “seems to be settling as people have more time to travel and go to dinner versus picking up a paint brush or hammer and reinventing their home,” Lautz says. She views the remodeling slowdown as short-lived because homeowners who locked in lower mortgage rates in recent years are likely to stay put rather than trade up at a higher rate. “As these homeowners stay put, they may need to invest in improvements or want to reimagine their space to fit their changing needs,” Lautz adds.
A Houzz survey earlier this year found that more than half of homeowners say they intend to renovate in 2023. The U.S. debt ceiling crisis and a fragile economy may have an impact on renovation activity, but there are some factors that may keep the remodeling sector strong in the long run.
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