The Home Improvement Research Institute focuses on research and trend data within the remodel, repair and home improvement industries.
The majority of attendees–product manufacturers and retailers— are focused on reaching both consumer and trade audiences to position their brand as the most dependable, convenient or innovative in the market. And, even though this year’s theme was directed at home improvement retailing, there were some standout statistics and trends that will influence business for NARI members.
Home improvement’s position in the market is improving
Joshua Rosenbaum, managing director at UBS Investment Bank in the Joint Global Head of Building Materials & Construction Group, dropped a bombshell at the start of his presentation, “The U.S. Economic Backdrop for Home Improvement.” New data about housing starts was released that very morning and went from 750,000 to 872,000—up 15% to the highest level since the crisis began.
This set the stage for the rest of his presentation, mostly concentrated on the slow growth and strengthening of an industry.
Emphasizing the gradual nature of this growth, Rosenbaum demonstrated signs that the double-dip recession theory will not come to fruition, and signs from the stock market (up 122.4% since its lowest point in 2008) that have made the home improvement market attractive to investors.
Low interest rates are a big driver of the current, positive stock market picture, he said. Economically speaking, low interest rates cause the value of the dollar to increase. Rosenbaum suggests that housing and home improvement markets have not hit their peak yet when compared with other industries such as the car industry. This, he says, means greater industry growth potential as things continue to improve.
There are other signs pointing towards growth in home improvement.
First, U.S. retail sales are trending upward, to $363 billion in August 2012, and the Joint Center for Housing Studies’ Leading Indicator of Remodeling Activity (LIRA) report placed the most recent remodeling activity at $115.1 billion.
Also, the new housing starts data is very telling of growth when looking at historical data from the 1950s. When factoring the country’s population increase from the 1950s to today (at about 110 million), it is evidence that more people require more homes. Multi-generational housing trends have kept this number from significantly growing lately; however, Rosenbaum believes the population growth will trigger more production eventually, outlasting the current trend. Other data tracking home sales place single-family home sales up 10% since last year.
What does it mean? Despite uncertainty in the future, pent up demand and increased affordability is an inevitable driver of growth, and buying and selling homes sparks renovations, which translates into more business for NARI members.
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