2016 WAS A GREAT YEAR FOR DIY RETAIL

The holiday season is upon us, and how DIY retail will fare remains to be seen, but 2016 by most accounts has been a great year for DIY retail. The North American Retail Hardware Association (NRHA) is estimating industry growth for 2016 to end at 5.8%. The Home Improvement Research Institute (HIRI) is estimating a little higher, at 6%. The US Census Bureau reports home improvement industry sales through September at 6.7% growth over 2015.

Building materials and home improvement retail sales are 3 to 1 higher than overall retail sales increases for this year.

What has led to the success, and which areas in the DIY space have seen the best results?

Most economists agree that the renewed housing market seen in 2016 will continue into 2017. Add to that higher consumer confidence rates, multi-family housing construction has led to higher sales at home centers and lumber dealers. Remodeling projects and big-ticket purchases are stronger. Big ticket items, such as appliances, have seen the biggest sales uptick in the segment.

Accelerated Analytics DIY customers, using their retailer POS data to analyze sales and inventory, are experiencing the same trends. Across the Accelerated Analytics customer index, June and July showed poor results, followed by an improving August and strong September. 20% of Accelerated Analytics customers’ sales tickets are big ticket items, over $900 per sale. These items were identified as appliances and other expensive items, along with supporting/supplemental products.

The NHRA is predicting 2017 sales to continue this trend and that home improvement product sales should continue to outpace overall retail sales in 2017, anticipating DIY industry growth in the range of 5%.

For more industry stats and observations, download the Accelerated Analytics Retail Industry Briefing Book, which is a monthly publication of key retail industry trends, published to over 7,000 subscribers per month.

Sources: Accelerated Analytics, Hardwareretailing.com

HOME DEPOT FOCUSES ON THE ONLINE SHOPPER…BY FOCUSING ON THEIR STORES

The Home Depot has been on the great end of the rebounding housing market with a continued 4% increase in sales in the last quarter, while homeowners work on big remodeling projects like installing decks or remodeling kitchens. Without plans to add more new stores, Home Depot focuses on how to use their existing stores in new ways.

About 42% of Home Depot online shoppers order online, but pick up in the store. To accommodate that, Home Depot is allocating capital to build out store storage to hold those products. When the customer is in the store, the retailer is trying new displays that help the customer shop easier. For example, the spray-paint section is set up like a soft drink display, so as one can is selected, the next can pops into place. In the lumber and millwork flooring area, the displays are easier for the customer to shop off of on their own, and the signage has been improved.

For the increasing online sales where customers want the items shipped to their homes, Home Depot has opened 3 new fulfillment centers that can deliver orders to 90% of their customers within 2 business days. They are also looking into leveraging their store locations to use local economical transportation for buy-online, ship-to-store orders.

Source: Wall St. Journal, IHRC

FALL IS HERE…WILL ECONOMIC FACTORS RISE?

Economic indicators for August dropped, but 2016 overall is still growing.

Home Sales: Existing-home sales dropped .9% in August, marking the second month in a row of decline. However, year-over-year sales are up .8% over last year. While new home sales have been steadily rising, existing-home sales make up 90% of the home sale market. The National Association of Retailers reports that with the housing market in 2016 being the strongest sector of the economy over the past two years, the market may be a “victim of its own success”. Sales early this summer reached the highest levels since 2007, which has led to an increase in prices and a shortage of inventory. The average home price is $240,200, up 5.1% from 2015. The NAR feels an increase in home building would solve the issue. A Commerce Department report this week indicated building permits for single-family homes, the largest segment of the housing market, increased in August.

Manufacturing: The Conference Board reported its leading economic index, weighing 10 different economic indicators, dropped .2% in August. The decline in attributed to the average workweek of production workers and the amount of new orders. However, in the six-month period ending in August, the index increased .9% to an annual rate of 1.8%, which is in line with slow growth reported in gross domestic products. It is forecasted to grow at a 3% pace.

Retail Sales: US retail sales were up 1.9% in August, which was down from 2.4% in July. Retail sales had shown strong gains in the spring but has slowed through the summer months. Sales at department stores fell .6% and general merchandise store sales were flat. Building and garden equipment store sales dropped 1.4%. Retail sales are expected to be on the rise, with Halloween sales expected to boom and the 2016 holiday outlook expected to be positive, especially in e-commerce sales.

Sources: Wall St. Journal, Market Watch

HOME IMPROVEMENT SPENDING EXPECTED TO REACH $321 BILLION BY MID-2017

After the housing crash of 2006, the US home remodeling market saw its worst downturn in history. Growth in home improvement spending has grown on average about 4.9% since then. Now, with home equity back and home prices on the rise, people are putting their cash to work to remodel and repair their homes.

Growth is expected to reach 8% by the start of 2017 and annual spending should reach an estimated $321 billion by the middle of next year, according to a new report from Harvard’s Joint Center for Housing. Kitchen and bath remodels are popular, along with high-yielding investments such as replacing insulation. Many are choosing to do multi-room remodels at the same time, up 67% from a year ago.

Growth in home remodeling is sure to boost sales for retailers such as The Home Depot, Lowe’s and Sherwin Williams.

Vendors who want better insights into their sales and inventory at their DIY retailers can CLICK HERE to learn more about our POS reporting solutions. 

Source: CNBC

US MANUFACTURING INDEXES TAKE A DIVE; STOCK LEVELS REACT

The New York Empire Manufacturing Index dropped to -9.02 from April’s positive 9.56 in May, missing estimates for a slight decline to positive 7.0. Stocks reacted negatively to the news, but were offset by gains in the energy and industrial sectors. Domestically oriented US manufacturers are seeing steadier business with bright auto, housing and job markets, while global manufacturers are struggling in markets from Brazil to Europe to China.

“Domestic demand is what has been supporting the manufacturing sector overall and preventing a sharper downturn,” said Gregory Daco, chief U.S. economist at Oxford Economics. “Domestic-oriented sectors are faring relatively well.”

Earlier in May, the Institute for Supply Management also reported its index results, but showed manufacturing activity already falling from March. A strong US dollar and low oil prices, plus weakness overseas, depressed demand for US exports.

The Philadelphia Federal Reserve also reported a decline in its index, reporting that mid-Atlantic manufacturing activity declined for the 8^th time in 9 months.

These reports maintain the overall picture of sluggish economic growth, and a newfound possibility that the Federal Reserve could raise interest rates as soon as June.

Sources: WSJ, Nasdaq.com, Investors.com, CalculatedRiskBlog.com 

HOUSING GAINS AND MILD WEATHER KEEP HOME DEPOT GOING STRONG

The Home Depot’s stock opened at a record-high level today, after announcing they topped first quarter expectations. Mild weather and a strong housing rebound are attributed to their successful first quarter. Revenue increased to $22.76 billion from $20.89 billion. Same store year over year sales rose 6.5% overall,up 7.4% in US stores.

Chairman and CEO Craig Menear said the company saw “week to week demand spikes caused by weather variability”. Home Depot originally forecasted 2016 earnings of $6.12 to $6.18 per share, with revenue predicted to increase 5.1-6% and same store sales to rise 3.7-4.5%. With its positive first quarter, Home Depot now predicts 2016 earnings of $6.27, sales to rise 6.3% and same store sales to rise 4.9%.

Having cited a strong housing rebound as another reason for a strong first quarter, steady growth for the housing market looks like it will continue. The National Association of Home Builders reported continued strong sentiment in May. Low mortgage rates are fueling demand that have boosted expectations for home sales in the next six months to the highest level of the year. More housing data is due out later this week, including housing starts and existing home sales.

Source: US News & World Report, Wall S. Journal

BUILDING SUPPLIERS SEE BEST QUARTER IN ALMOST A DECADE

Amid reports from the Commerce Department that housing starts in March were up 14.2% from last year, paint, drywall and other building suppliers are seeing an uptick in sales. Sherwin Williams reported on their investor call forecast-beating first quarter profits. They reported an 11% increase in sales revenue from its stores and a 44% improvement in profit.

USG Corp., manufacturers of drywall and ceiling tiles, reported the “best quarter we’ve had in almost a decade”. Sales increased 7% to $970 million.

Great weather is attributed to work on homes starting earlier in the year than usual. Illinois Tool Works Inc., supplier of screws, fasteners, nail guns and other items improved its operating margin to 21% from 17% last year. Says CEO Scott Santi, “We certainly exited the quarter in pretty good shape. We’re not seeing anything slow down.”

Building materials, garden equipment and supply dealers show estimated sales increases of 11.9% over Q1 2015. Analysts are predicting that Home Depot and Lowe’s may post stronger than expected sales for their quarters ending April 2016.

Source: Wall St Journal, Seeking Alpha

FIRST QUARTER 2016 CONSUMER ECONOMIC NEWS: SPENDING IS SOFT BUT HOME SALES RISE

As the first quarter of the year comes to a close, consumer spending stayed soft, rising just 0.1% for the third consecutive month. Incomes have been rising faster than that rate, indicating that Americans seem to be saving rather than spending. Gross Domestic Product (GDP) growth also slowed. Consumer spending generates more than 2/3 of total US economic output. Economists are concerned but a recession is not being indicated yet since the markets stabilized and the job market appears to be on track.

On the home sales front, there is more optimistic news. Pending home sales jumped 3.5% in February, the highest level in 7 months. Pending sales offer insights into future sales activity. The Realtors’ is forecasting 5.4 million existing-home sales this year, an increase of 2.4% from 2015. The housing market in 2015 was the strongest since before the recession and 2016 seems stronger yet.

Source: Wall St. Journal

US ECONOMY STARTS 2016 SLOW YET STEADY AS CONSUMER SPENDING GOES UP IN JANUARY

Consumer spending grew in January, showing an improvement in retail sales and home purchases. On Friday, the Commerce Department reported personal spending rose 0.5% in January from the prior month. Americans’ pretax earnings from salaries and investments increased at about the same pace. US consumer confidence dropped slightly in January but recovered slightly in February, a sign of slower but steady economic growth.

Reports Friday also revealed that gross domestic product advanced at 1%, higher than the estimate of 0.7%. Inflation still runs below the Federal Reserve’s 2% inflation target.

Improvement in overall economic growth for the quarter ending January 30 was mainly due to the fact that companies pulled back on inventory less than originally expected. Economists have cautioned that first quarter growth may be slow as companies take longer to work through their well-replenished stock.

Source: The Wall St. Journal

WARM WEATHER HELPS HOME DEPOT SALES RISE ALMOST 10% IN 4TH QUARTER, AS HOME PRICES INCREASE AND DEMAND FOR NEW HOME CONSTRUCTION STARTS 2016 WITH SLOW GROWTH

The Home Depot’s fourth-quarter sales included an 8.9% sales increase in US stores that have been open for at least one year. This is despite the challenges facing the rest of the retail industry. Sales were strong the entire quarter, but warm weather in December brought in a sales spike – Home Depot attributes $100 million in sales growth to the milder weather. High sales were seen for power washers and pressure-treated lumber by homeowners building decks.

Home prices also rose in December, showing the strongest gains since July 2014. The Home Price Index showed a rise of 5.2% in the 12 months ending in December, versus a 5.2% in November. The national median sale price for a home in December was $213,800, 8.2% from the previous year. There is a limited inventory of homes for sale, and demand for new homes is likely to drive more new construction and help keep a ceiling on the rising home prices, although January 2016 was a slow start for new home construction for the year.

Accelerated Analytics helps Home Depot vendors, such as WM Barr, Hillman Group, Alexandria Molding, and CPG Building Products to manage their sales and inventory data to drive results. Our vendors use our analytical measures, such as sell through, inventory shortages, out of stocks, weeks of supply and consumer purchasing trends, to take quick actions to ensure they are optimizing inventory and growing sales.

Source: Wall St. Journal

NEW HOME CONSTRUCTION DROPS AGAIN WITH SLOW START IN 2016 – WILL HOME DEPOT EARNINGS BE AFFECTED?

Showing the lowest rate since October, new housing starts fell 3.8% in January from a month earlier. U.S. home builders are reporting a positive outlook as spring approaches, citing solid fundamentals for housing demand, such as job gains and low mortgage rates. Demand for housing has been strong over the past year but growth has been slow, with housing starts just 1.8% higher than January 2015.

Home builders are reporting shortages of land and labor, leading to project delays and higher construction prices, which lowers demand for new homes. However, new home sales in December were up 9.9% from a year earlier. “The weak showing in construction activity is broadly consistent with the recent souring in home builders’ sentiment, and when combined with the downdrift in permit approvals it suggests some slowdown in the months ahead,” said Millan Mulraine, economist at TD Securities USA, in a note to clients.

The Home Depot performed very well in 2015, giving investors better returns than competitor Lowe’s. The Home Depot opened 2016 with a large pullback due to fears about the general economy and the housing market in particular. An anticipated rise in mortgage rates has not happened and Home Depot is gearing up for spring, its busiest period of the year. The company will hire more than 80,000 workers for its 2,000 stores and 75 distribution facilities. The Home Depot’s domestic business has kept it in the lead, but with Lowe’s announcement of its acquisition of Canadian home-improvement chain Rona, international expansion could be important to future growth.

Source: WSJ

LOWE’S COMPANY SHARES RAISED TO OUTPERFORM

With an improvement in housing and overall economic activity in Southeastern states, Lowe’s is expected to witness accelerating sales and potentially narrow its comp store sales with Home Depot in the region. A report this week forecasts a 4% growth at Lowe’s following disappointing Q1 2015 sales of $14.1 billion versus $14.26 billion. However, Lowe’s Companies’ revenue was up 5.4% compared to Q1 2014.

Several equities research analysts issued positive reports for Lowe’s stock, setting buy ratings over $80 per share. Experts expect Lowe's to complete the year with $3.94 EPS. 

Source: The Legacy

New Home Sales Rise 11.6 Percent In December

January 27, 2015

Sales of newly built, single-family homes rose 11.6 percent in December to a seasonally adjusted annual rate of 481,000 units, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

"This uptick is in line with what our builders are telling us in surveys and on the ground - that they are seeing increased traffic and more serious buyers in the market for single-family homes," said Tom Woods, chairman of the National Association of Home Builders (NAHB) and a home builder from Blue Springs, Missouri.

"After a slow start to 2014 precipitated by bad weather conditions, new home sales have ramped up in the second half of the year," said NAHB Chief Economist David Crowe.  "We can expect this momentum to continue into 2015 with the release of pent-up demand, particularly as existing home owners are trading up."

The inventory of new homes for sale rose to 219,000 in December, which is a 5.5 month supply at the current sales pace.  Regionally, new home sales rose 53.6 percent in the Northeast, 17.7 percent in the South and 3.1 percent in the West.  Sales dropped 11.5 percent in the Midwest.

Source: National Association of Home Builders

Housing Starts End Year On High Note

January 21, 2015

Led by solid gains in single-family housing production, nationwide housing starts rose 4.4 percent to a seasonally adjusted annual rate of 1.089 million units in December, according to newly released data from the U.S. Commerce Department.  For the year, overall housing starts topped 1 million units.

"Today's figures continue to be in line with our recent surveys, as builders have been becoming increasingly optimistic," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.

"With overall starts ending the year above 1 million units for the first time since 2007, we expect this momentum to carry forward in 2015," said NAHB Chief Economist David Crowe.  "A growing labor market and strengthening economy will spur steady growth in single-family housing production in the year ahead."

Single-family housing production rose 7.2 percent to a seasonally adjusted annual rate of 728,000 in December while multifamily starts edged 1 percent lower to 361,000 units.

Combined single-family production was up in three out of four regions in December.  The Northeast posted a 12.5 percent gain, the South was up 8.8 percent and the West registered a 5.8 percent increase.  The Midwest posted a 13.3 percent decline.

Overall, permit issuance was down 1.9 percent in December to a rate of 1.032 million.  Single-family permits rose by 4.5 percent to 667,000 units while multifamily permits fell 12 percent to a rate of 365,000 units.

Regionally, permits were mixed in December.  The Midwest and South posted gains of 6.7 percent, respectively, while the Northeast and West dropped 16.8 percent and 20.5 percent.

Source: National Association of Home Builders

55+ Housing Market One Of The Most Robust Segments Of The Market In 2014

January 21, 2015

The 55+ housing market fared quite well in 2014, and 2015 should be no different, according to industry experts at a press conference held today at the National Association of Home Builders (NAHB) International Builders' Show (IBS) in Las Vegas.

"The 55+ housing market has been one of the healthiest segments of the overall housing market, and is likely to remain that way over the next several years," said Paul Emrath, NAHB's vice president of survey and housing policy research.  "When you look at age-restricted single-family starts, there were as many in the first half of 2014 as in all of 2012.  And going forward, the steady rise in the 55 and over population will signal an increased need for housing to accommodate that group."

Emrath also noted that builder confidence has steadily increased over the past several years.  "NAHB's 55+ Housing Market Index (HMI), a survey of members that measures builder and developer confidence for that market, has regularly posted year-over-year gains."

Builders and developers say they have seen an increase in not only the number of people who are generally interested in 55+ housing, but also in the number of people who are actually making the move to purchase a new home.  "We are seeing more consumers actually make the decision to buy a new home as they are able to sell their current home at an acceptable price," said Steve Bomberger, chairman of NAHB's 50+ Housing Council and president of Benchmark Builders Inc. in Wilmington, Delaware.  "We are busier now than ever before.  And I don't think it's going to slow down anytime soon."

"Consumers in this market are looking for a home that accommodates their specific needs, and 55+ builders and developers are able to create homes and communities that address these needs," said Timothy McCarthy, vice chairman of NAHB's 50+ Housing Council and managing partner of Traditions of American in Radnor, Pennsylvania.  "As the economy continues to improve, so does our overall business.  Builders in this market have the opportunity to have tremendous success since the population we are serving is so vast."

Source: National Association of Home Builders 

A More Robust Year For Housing In 2015

January 20, 2015

A strengthening labor market, low interest rates, improving mortgage availability and growing pent-up demand will help to significantly boost single-family housing production in the year ahead and move the housing recovery to higher ground, according to economists speaking at the International Builders' Show in Las Vegas today.

With economic growth near 4 percent for the last half of 2014 and employment gains averaging more than 250,000 per month last year, NAHB Chief Economist David Crowe said these are the primary factors that have helped consumer confidence jump back to pre-recession levels.

"The signs point to a more robust year for housing," Crowe said.  "Household balance sheets are returning to normal levels, home owners' equity is increasing and significant pent-up demand is rising.  More than 7 million existing home sales were postponed or lost during the downturn; and while some are lost forever, we should see some catch-up."

The Forecast

NAHB is projecting 993,000 total housing starts in 2014, up 6.7 percent from last year's total of 930,000 units. 

Single-family production is expected to rise 26 percent in 2015 to 804,000 units.  "While a good beginning, this is still well below a normal level of 1.3 to 1.4 million single-family starts," Crowe said.

On the multifamily front, NAHB is anticipating 358,000 starts in 2015, up 2 percent from 352,000 last year.

The sale of new single-family homes is expected to hit 564,000 this year, a 29.3 percent increase above last year's 436,000 in sales.

Meanwhile, residential remodeling activity is expected to register a 3 percent gain this year over 2014.

The ongoing housing recovery will see single-family starts steadily climb from 49 percent of normal production at the end of the third quarter of 2014 all the way up to 90 percent of normal by the end of 2016, Crowe said.  Examining the recovery on a state level, by the end of 2016, the top 40 percent of states will be back to near normal production levels, compared to the bottom 20 percent, which will still be below 75 percent.

Where are All the New Households?

David Berson, chief economist at Nationwide Insurance, said the number of new household formations was far fewer in the current economic expansion than in previous recoveries.

"Given the job growth we've seen in 2014, there should have been better household formations," he said, adding that the slower pace may be because "the real acceleration in job growth has occurred just recently - in the last six months."

As the economy and job growth continue to strengthen in 2015, Berson said this will be a "significant factor to encourage people who have doubled up to move out on their own."

Moreover, he noted that the real slowdown in household formations has come from the Millennials, who have suffered disproportionately from stagnant wage growth and student debt.  However, he added that this key demographic is getting older and ready to set down roots.  "The leading edge are new in their young 30s," said Berson.  "Homeownership desire is much higher for those who are in their 30s than those in their 20s."

A Rising Economy Lifts Housing

Freddie Mac Chief Economist Frank Nothaft also foresees a good year for housing.

"We're projecting 3 percent economic growth in 2015, which would only be the second year in the last decade that we've seen growth at that level," said Nothaft.  "A stronger economy supports a rise in household formation and home buying."

Not quite as bullish as NAHB, Nothaft expects that housing starts will rise about 15 percent in 2015, and that home sales will be up 4 percent, which would be the best year for home sales since 2007.  He added that nationwide home prices this year should increase about 3.5 percent to 4 percent above last year's level.

With 30-year mortgages currently running at about 3.75 percent, Nothaft called them "dirt cheap" and said he expects rates to rise this year but remain at affordable levels.

"If we see economic growth running at 3 percent at an annualized rate, the Federal Reserve should begin to push up short-term interest rates by the second half of 2015," said Nothaft.  "We see mortgage rates going up to 4.5 percent on the high side at the end of this year, going from dirt cheap to cheap.  Overall, affordability for buyers in most markets will be well maintained in the context of strong job and income growth."

Source: National Association of Home Builders

Multifamily Housing Set To Remain Strong In 2015 As Demand From Renters Continues

January 21, 2015

The multifamily market has had strong demand in recent years and is set to remain that way in 2015 despite certain headwinds that could affect the industry, said panelists during a press conference at the National Association of Home Builders (NAHB) International Builders' Show (IBS) in Las Vegas.

The number of multifamily apartments forecast to be built is likely to reach a sustainable level that is higher than the levels of production in the past.  As the industry reaches that new plateau, the pace of construction is likely to level off in 2015 and into 2016.

"The multifamily industry is strong and producing more units than in previous cycles," said NAHB Chief Economist David Crowe.  "The industry has shown dramatic increases in construction since the recession, but the level of increase will moderate as we approach equilibrium.  We are forecasting that 358,000 units will be developed in 2015 and 361,000 units in 2016.  One of the indicators for our forecast is NAHB's Multifamily Production Index, which is a survey of our members' attitudes toward the market.  They have been telling us that the market is very strong and is expected to stay that way for the forseeable future."

Although Dr. Crowe and other panelists are optimistic about the future of the multifamily housing market, there are still challenges that face the industry such as increasing costs and availability of labor.  But demand for apartments is strong enough for developers to proceed in most markets, the panelists noted.

One of the markets in particular within the multifamily industry that has strong demand is affordable rental housing.  "There are many families in America that have a great need for affordable housing, said Mike Costa, president and CEO of Highridge Costa Housing Partners LLC in Gardena, California.  "We have a long waiting list for our apartments at all of our communities.  There is a need for us to be building more."

Source: National Association of Home Builders

Builder Confidence Holds Steady In January

January 20, 2015

Builder confidence in the market for newly built single-family homes declined one point to 57, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index released today.  This marks the third straight month that the index has hovered in the upper 50s range.

"After seven months above the key 50 benchmark, builder sentiment is reflecting the gradual improvement that is occuring in many markets throughout the nation," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.

"January's HMI reading is in line with our forecast as we head into the new year," said NAHB Chief Economist David Crowe.  "Steady economic growth, rising consumer confidence and a growing labor market will help the housing market continue to move forward in 2015."

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor."  The survey also asks builders to rate traffic of prospective buyers as "high to very high," average" or "low to very low."  Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI component gauging current sales conditions remained unchanged at 62 in January while the index measuring expectations for future sales dropped four points to 60 and the component gauging traffic of prospective buyers fell two points to 44.

Looking at the three-month averages for regional HMI scores, the West rose by four points to 66, the Midwest registered a three-point gain to 57 and the Northeast was up two points to 47.  The South dropped two points to 58.

Source: National Association of Home Builders

Residential Remodeling Market Set For Modest Growth In 2015

January 20, 2015

Residential remodeling is set for modest growth in 2015, according to experts at a press conference hosted by the National Association of Home Builders (NAHB) Remodelers at the International Builders' Show (IBS) in Las Vegas.  Remodelers appearing on the panel agreed with the forecast, citing home owners' changing demographics and increased financial security.

NAHB projects that residential remodeling spending on owner-occupied single-family homes will increase a modest 3 percent in 2015 over 2014, and another 1.5 percent in 2016.

"Remodelers are responding to calls from home owners on steadier financial footing than recent years," said NAHB Remodelers Chairman Robert Criner, GMR, GMB, CAPS, CGP, a remodeler from Newport News, Virginia.  "From major kitchen remodels and bath facelifts to room additions, the members of NAHB Remodelers look forward to providing professional remodeling services in 2015."

"Among our clientele, a demographic shift towards remodeling urban homes is taking place," said Mike Nagel, CGR, CAPS, a remodeler from Chicago.  "Our recent jobs tend to be in the city and the projects have increased in size."

"Existing homes sales and house prices both hit soft spots in 2014 that dealt a glancing blow to residential remodeling businesses," said Paul Emrath, NAHB's vice president for survey and housing policy research.  "We expect those drags are behind us in 2015, an outlook consistent with the optimism expressed by remodeler members in our recent Remodeling Market Index (RMI) survey."

Source: National Association of Home Builders

Growth Slowing In Home Remodeling In 2015

January 15, 2015

As the broader housing market continues its sluggish recovery, growth in home improvement spending is also expected to soften throughout the coming year, according to the Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.  The LIRA projects annual growth in home improvement spending will decelerate from 6.3% in the first quarter of 2015 to 1.6% by the third quarter.

"Due in part to weakening home sales last year, growth in remodeling spending is expected to deflate somewhat in 2015," says Chris Herbert, Managing Director of the Joint Center.  "Homeownership rates continue to slide as lending remains tight and first-time homebuyers are not yet returning to the market."

"Although contractor sentiment has cooled in recent quarters, it remains favorable overall," says Abbe Will, a research analyst in the Remodeling Futures Program at the Joint Center.  "House price gains are moderating but still strong and home sales appear to be turning a corner now, all of which bodes well for continued, if more moderate, home improvement gains for 2015."

Source: Joint Center for Housing Studies