Home Improvement Thrives

Housing starts and existing home sales stayed at a high level throughout 2005. Both are expected to post increases of over 4 percent for the year.
Mortgage rates may be on the rise, but the home improvement industry remains strong. Total home improvement product sales in 2005 are estimated to have reached a new record of $291 billion - up 7.5 percent. With the help of continued hurricane rebuilding activity, 2006 sales are expected to increase an additional 4.6 percent to $305 billion.

These estimates have been developed as part of an ongoing Home Improvement Research Institute (HIRI) program by one of its suppliers, Global Insight. According to its most recent study, housing starts and existing home sales - strong coincident indicators for home improvement activity - stayed at a high level throughout 2005; both are expected to post increases of over 4 percent for the year.

"With the housing market beginning to show a gradual slowdown, there has been some talk that the home improvement industry will suffer its effects," said Fred Miller, managing director of the HIRI.

"But housing turnover is only part of the picture. A large piece of the home improvement market involves maintenance and repairs as well as improvements to homes where there is no change in ownership. This makes the home improvement industry far less cyclical than new home construction."

Even the most current data points to the continual health of the home improvement industry. In recently released data from the U.S. Department of Commerce, December retail sales for building material and garden equipment/supply dealers grew 9.7 percent over the same period in the prior year. This growth was significantly above retailing in general.

Continued hurricane rebuilding efforts will also help to offset the effects of a market slowdown well into 2006. In particular, the professional market, stimulated by the repair and rebuilding efforts, was up by 8.4 percent for 2005, outperforming consumer market sales.

The long-term outlook for the market remains strong. Global Insight projects an average of 4.6 percent total market growth in constant dollars for 2008 through 2010 - below the pace of the past five years, but well ahead of the rate of overall economic growth.

The Home Improvement Research Institute is a membership-based, independent, nonprofit organization of manufacturers, retailers, wholesalers and allied organizations in the home improvement industry. Its mission is to be recognized as the primary authority for effective, useful information about home improvement products and services in North America. The membership of HIRI currently represents over 70 of the leading firms in the industry.

Publication date: 02/27/2006

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