The Home Improvement Industry 2022 Year in Review

The COVID-19 home improve­ment boom was bound to slow down even­tu­al­ly. After two years of dou­ble-dig­it mar­ket growth, eco­nom­ic pres­sures are expect­ed to stall growth of cat­e­go­ry activ­i­ty over the next year.

Industry experts are torn regarding the expected severity of the probable 2023 recession. Despite overall economic uncertainty, HIRI research findings support a stance that the home improvement mar_ket is still expect_ed to grow, albeit incrementally, throughout 2026 ' which is good news for our industry.

While it's impossible to know the exact outcome for the road ahead, we can take a look back on the path we've traveled so far. Here's a quick recap of the events that defined 2022 for the home improvement industry:

1. Home improvement product purchases continued to soar at the start of the year.

At the start of 2022, home improve­ment prod­uct pur­chase rates in all cat­e­gories were still grow­ing sig­nif­i­cant­ly across the board. HIRI observed a large jump in retail sales fig­ures, indi­cat­ing the con­sid­er­able invest­ment home­own­ers con­tin­ued to make in their homes dur­ing the begin­ning of the year.

Activ­i­ty among pro­fes­sion­al con­trac­tors was espe­cial­ly high, as home­own­ers hired help to com­plete larg­er projects that had been delayed by the pandemic.

2. Material shortages caused professionals to try new products.

Unfor­tu­nate­ly, high demand mixed with lin­ger­ing sup­ply chain woes from the response to the pan­dem­ic ampli­fied long-last­ing chal­lenges for pro­fes­sion­al con­trac­tors, includ­ing mate­r­i­al delays and high prices.

By April 2022, covid con­cerns of home­own­ers was no longer one of the lead­ing caus­es of project delays. From April through year end, mate­r­i­al avail­abil­i­ty con­tin­ued to be the biggest cause of project delays. The sec­ond-most lim­it­ing fac­tor became mate­r­i­al prices.

By November 2022, material availability remains the top cause of project delays among 63% of Professionals and material prices remains the top limiting factor among 35% of professionals.

Professionals continue to rank material prices, material availability, and labor as the top 3 challenges facing their businesses.

3. To keep costs low, more homeowners turned to DIY.

The same supply chain issues that plagued professional contractors left homeowners feeling unsatisfied with the cost or pace of their home improvement projects.

In May 2022, homeowners reported high expenses or contractor unavailability as the top obstacles for hiring a professional. This is likely why most homeowners reported completing at least one project themselves instead of hiring help.

Because of labor challenges, contractors still have strong lead times on projects and have yet to feel the full effects of changing homeowner sentiments towards hiring contractors.

By November of 2022, more homeowners reported postponing projects altogether - 57% up from 42% in May.

4. Consumers faced setbacks with smart-home devices.

In the midst of material delays and supply chain woes, consumers continued to adopt a growing number of internet-connected devices into their homes. However, the rise of smart devices and low-cost market options has not come without setbacks.

A 2022 HIRI report unveiled that half of consumers purchasing connected devices are also returning them. This was mostly due to the devices not performing as advertised or difficulties setting up the products.

Addi­tion­al­ly, HIRI found that 50% of smart-home device own­ers have expe­ri­enced an inter­net issue with one or more of their devices. Smart light­bulb, sprin­kler sys­tem, smoke detec­tor and plug own­ers encounter the most prob­lems on aver­age. When reliant on con­nec­tiv­i­ty, even the least trou­ble­some smart home devices caused prob­lems for house­holds, man­u­fac­tur­ers and retail­ers alike in 2022.

So, what’s next?

Infla­tion and a prob­a­ble 2023 reces­sion will affect how much home­own­ers spend on home improve­ment going forward.

Ana­lysts fore­cast total home improve­ment prod­ucts mar­ket growth to decel­er­ate from 7.2% in 2022 to 1.5% in 2023, with the con­sumer and pro­fes­sion­al mar­kets grow­ing by 0.6% and 3.6%, respectively.

Look­ing through a greater eco­nom­ic lens to deter­mine the hous­ing mar­ket out­look, the Nation­al Asso­ci­a­tion of Home Builders’ Danush­ka Nanayakkara-Skilling­ton pre­dicts that we will see a mild reces­sion with sig­nif­i­cant chal­lenges to builders, how­ev­er, noth­ing on the scale of the 2008 U.S. recession.

We advise read­ers to not be scared at the thought of a poten­tial reces­sion and to con­tin­ue to take advan­tage of oppor­tu­ni­ties for grow­ing their busi­ness­es through­out the near future. The impacts are like­ly to reset cat­e­go­ry growth tra­jec­to­ries onto paths sim­i­lar to pre­vi­ous, 2019 forecasts.

Need fur­ther insight to help guide your prod­uct, chan­nel, mar­ket­ing, and sales teams? HIRI mem­bers have on-demand access to the lat­est mar­ket con­di­tions and insights among home improve­ment cus­tomers all year long. Book your con­sul­ta­tion to learn more about becom­ing a HIRI member.