The Home Improvement Research Institute, the nation’s leading resource for market research concerning the home and building products industry, 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% 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% increase reflects a healthy market. In 2020 and 2021 alone, consumer spending on home improvement soared to 15% and 13.3%, respectively, as homeowners invested time and money into their spaces that served as homes, offices, schools, gyms and more.
“The extreme increase in demand for home improvement products that we witnessed because of the pandemic was bound to calm sooner or later,” said 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 reports 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% in 2022 after climbing 2.2% 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.