HIRI expects accelerated home improvement spending

Home improvement spending is expected to gain steam in 2024 after two years of declining growth, according to the Home Improvement Research Institute (HIRI).

The institute is expecting the market to climb by 2.7% in 2024 with the consumer market growing by 3.3% and the professional market growing by 1.4%. 

HIRI said current consumer sentiment continues to rise with disposable income and equity gains, which has buoyed consumer spending on home improvement. 

Additionally, the Federal Reserve is expected to lower interest rates in 2024, which will provide tailwinds for home improvement spending.

“Traditionally, home sales drive spending on home improvement. However, with the high interest rates of recent years, homeowners embraced the ‘locked-in effect,’ choosing to remodel rather than sell,” said Dave King, executive director at HIRI. “As interest rates decline, we anticipate a return to home sales as the primary motivator for home improvement.”

Within the consumer market, “real disposable income” is projected to grow by 2.8% and real personal consumption expenditures by 2.6% in 2024. HIRI projects consumer market sales will increase 3.3% in 2024 to $392.6 billion and for growth to average 3.1% 2026–2028. 

HIRI further breaks down this forecasted growth by product category.

Top-growing merchandise lines for consumers:

• Soft-surface floor coverings
• Hard-surface floor coverings
• Other building materials
• Paint and preservatives
• Roofing and supplies

These merchandise lines will see compound annual growth rates between 3% and 6% in 2025 through 2028, Hiri said.

HIRI forecasts professional market sales will grow at a slower pace than sales among consumers, but still increase 1.4% in 2024. Additionally, HIRI projects home sales will pick up 6.3% in 2024 following a decline of 19.3% in 2023. Due to this rebound, growth in professional market home improvement sales is expected to accelerate faster by 2025 and to average around 6% CAGR in 2027 and 2028.

Top-growing merchandise lines for professionals:

• Lawn and garden equipment and supplies
• Nursery stock and soil treatments
• Tools
• Hardware
• Major household appliances

These merchandise lines will see CAGR between 4% and 5% in 2025 through 2028, according to HIRI.

“While there will always be uncertainty in the economy, HIRI’s goal is to supply the research needed to help our members make informed decisions,” King said.