The latest numbers shared during the Home Improvement Research Institute’s (HIRI) Nov. 14, Pulse Webinar continues to predict modest growth within the remodeling industry over the next few years.
Much of the anticipated growth is due to the housing market recovery.
New single-family home sales in September increased by 5.7% from last month—and just about 27% from September 2011. Existing single-family home sales were 10.8% above last year’s level of 3.80 million sales. Pending home sales are 14.5% above the September 2011 figures. The West continues to lag behind in the housing recovery when compared with the rest of the country.
Much of this housing activity over the last year is related to interest rates and affordability.
Average home prices have increased by .9% from July to August, and housing is becoming more affordable because of the continued decline in mortgage rates. Thirty-year fixed mortgage rates have hit a new, all-time low in October, at 3.38%. This has assisted with refinancing originations, up 30% from last quarter.
Data from HIRI’s “2012 Recent Home Buyers Study” is very telling of what remodelers may face with an improving housing market. According to the data, which focused only on people who bought homes in the last 12 months, distressed or pre-owned home buyers are most likely driving remodeling trends in this sector. Recent home buyers tend to remodel bathrooms, living rooms and bedrooms; kitchens grew in popularity compared with years past, with 20% of recent home buyers who are planning to remodel focusing on the kitchen. The top project by this group is landscaping, with one-third of the response.
The data also shows that half of recent home buyers consider using a paid contractor for current, prior and future projects, and use of contractors rose significantly since the last study conducted in 2010. Reasons for hiring professionals include the job being too big to do-it-yourself, homeowners not being comfortable doing the job themselves and wanting the job done right.
Finally, brand new data from the “HIRI Sentiment Tracking Study,” which hasn’t yet been released, shows nearly 65% of homeowners and renters combined are planning at least one project in the next three months. Homeowners in the South had the highest incidence of planning in comparison with the other regions. The top two priorities for remodeling plans are energy efficiency and the attractiveness of the home across all regions.
Other positive signs
- The Conference Board and University of Michigan consumer confidence indexes are both at the highest levels this year, improvements to the job market is a major driver, followed by upbeat financial situations and the approaching holiday season.
- The September 2012 results from the HIRI Size of Market Report places consumer market sales growth at 5.3% increase by the end of the year. Looking ahead to 2014 and 2015, growth is predicted to increase by nearly 6%, in line with the expected recovery in the housing market.
- According to the U.S. Census Bureau, consumer expenditures in residential improvement spending through September 2012 increased by 7.4% compared with the same time last year.
- Hurricane Sandy is expected to have some impact on the industry—the significance of this impact is unknown at this point.