Homeowners opting for repairs over remodels
Wednesday, August 14, 2019
By some measures, the home improvement industry is bustling. More homeowners are taking on more projects and spending more on those projects.
That has helped to sustain growth in remodeling services this year, but not as much as one might expect. Recent industry reports indicate that a large portion of homeowner spending is being directed toward repairs and routine maintenance rather than remodeling and renovation.
Results of the Home Improvement Research Institute (HIRI) Quarterly Project Sentiment Tracking Survey for the second quarter of 2019 show 75% of homeowners planned to undertake one or more projects in the coming three months, at an average of 4.3 projects per household. The report states that is the highest planning incidence recorded since HIRI began tracking project sentiment in 2012.
Of the 32 project areas the survey tracks, homeowners’ top priorities were improvements in the kitchen, windows, driveway, exterior paint, and roof. That’s good news for contractors.
A study conducted earlier this year by HIRI found that homeowners were more likely to hire or work with a professional when undertaking kitchen remodels, window replacements, and roof repairs or replacements. They also were more likely to spend more when working with a pro.
However, the study also found that nearly three-fourths of all projects involved some DIY participation on the part of the homeowner and that two-thirds of all projects were completely DIY. Often these are projects that require mostly time and manual labor than specific expertise, such as painting, lawn and garden care, or replacing hardware or appliances.
Remodelers are keeping busy but are seeing signs of deceleration in demand. According to the National Kitchen and Bath Association (NKBA), during the economic recovery expenditures on home remodeling rose 44% between 2016 and the beginning of 2018, peaking in April 2018, but have since been in decline.
It recently reported expenditures in June were down by 0.5% from the previous month but have remained relatively stable at around $177 billion for the year. The association’s Kitchen and Bath Market Index (KBMI) for the second quarter posted a score of 65.7, compared to a score 71 in the previous quarter.
Although the latest index reading indicates continued growth, remodelers reported a slowdown in luxury projects and a notable shift toward lower-price-point projects. The association also said the weak market for resale homes has impacted demand for remodeling services.
Another sign of deceleration is a falling off in hiring. The NKBA reports K&B firms hired an additional 1,400 workers in June, only partially recovering a loss of 2,200 positions the previous month.
For all practical purposes, it says, employment growth among remodeling firms has stopped and total employment has stabilized for now. That is a somewhat surprising turn, given that earlier in the year project delays and backlogs were said to be due to labor shortages.
Despite the softening in demand, the NKBA stated its members are optimistic business activity will remain strong in the third quarter and is projecting an annual growth rate of 4.7%. That sentiment was recently echoed by the National Association of Home Builders, which affirmed remodelers’ confidence at the end of the second quarter remained positive.
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