The U.S. home improvement industry is poised for growth, according to a major report released by the Joint Center for Housing Studies at Harvard Univ. “A New Decade of Growth for Remodeling” is the sixth report in the Improving America’s Housing series, published by the Remodeling Futures Program at the Joint Center.
Over the coming years, remodeling expenditures are expected to increase at an inflation-adjusted 3.5% average annual rate, below the pace during the housing boom, but sharply recovering from the recent downturn.
The industry, which saw a double-digit decline since its peak in 2007, is beginning to return to a more typical pattern of growth. Market fundamentals—the number of homes in the housing stock, the age of those homes and the income gains of homeowners making improvements—all point to increases in remodeling spending.
In the next 5 years, the focus of remodeling spending will shift from upper-end discretionary projects to replacements and systems upgrades. Remodeling contractors have a number of growth opportunities generated by underinvestment in distressed properties, lower mobility, changing migration patterns, and the rise of environmental awareness.
“Lower household mobility following the housing market crash means that in the coming years homeowners will increasingly focus on improvements with longer paybacks, particularly energy-efficient retrofits,” said Kermit Baker, director of the Remodeling Futures Program at the Joint Center. “Also, a slowing of migration to traditionally fast-growing Sunbelt metro areas means that, at least temporarily, more remodeling spending will remain in older, slower-growing areas in the Rustbelt and in California.”