Home Remodeling Index Pushes to Record Levels of Positive Sentiment
CHICAGO–(BUSINESS WIRE)–Positive sentiment among residential contractors across the U.S. pushed to even higher levels in Q2 2021, according to the latest U.S. Remodeler Index (USRI), which surveys design and construction pros in three industry segments: design-build, full-service as well as specialty home improvement. It registered a confidence level of 75.3, up from a very strong 72.7 in Q1.
The USRI, a collaboration between Qualified Remodeler and John Burns Real Estate Consulting, is a diffusion index where readings over 50 are positive. Last fall, the reading was 57.1. Confidence has soared since then.
“The Q2 USRI demonstrates the compelling shift that we are seeing in remodeling spending after COVID, namely growth in deferred big-project remodels,” said John Burns analyst Todd Tomalak. “We continue to worry about labor availability, but the favorable mix-shift in project size is encouraging. Overall, we expect big-project remodel spending to continue to grow while DIY and small project slows.”
There are four takeaways from the latest reading, said Tomalak.
- Larger-scale remodels are becoming the norm. Sixty-two percent of remodelers say their average project size continues to increase. In addition to larger projects, 71 percent of remodelers who reported a shift in average price-point say clients are spending more, noting that consumers increasingly understand the long-term value of high-quality products and materials.
- Pipelines are bursting at the seams. Over 50 percent of remodelers across all industry segments report larger pipelines in 2Q21 vs. the same prior-year period. With manufacturing lead times extending into Spring 2022 and labor shortages at an all-time high, remodelers are purposefully extending their timelines to ‘meter’ work and catch up on growing backlogs.
- Some consumers are considering hitting pause. Fifty-three percent of remodelers reported project cancellations or postponements in Q2 2021. Remodelers note that cancellations and postponements have been minimal but escalating prices as well as labor and product delays have led some consumers to hold off for the time being.
- Double-digit revenue growth of 11 percent expected for FY 2021. Demand is bullish, fueling remodeler confidence in full-year 2021 revenue expectations. Remodelers urge manufacturers to minimize product lines and focus on reducing lead times for hot-ticket items like high-end cabinetry and appliances. On average, remodelers expect revenues to grow 11 percent this year, slightly lower than last quarter’s read of 12 percent.
Steve Basten, a vice president with John Burns, said the index shows that a number of varying forces are at play in the remodeling market.
“We’re in one of the most unique periods of remodeling activity in history,” said Basten. “Over the past year consumers have been dreaming up and saving for a dream-home project and all this pent-up demand is finally starting to play out. I expect we’ll continue to see strong demand for whole-home remodels through the end of 2021. Homeowners have ‘waited this long’ and most will not abandon their plans now. We will continue to monitor the voice-of-the-remodeler closely and be the first to report on any industry slowdown.”
Qualified Remodeler is a media brand that has served the remodeling industry since 1975. It reaches 83,000-plus remodelers in print and thousands more online. It is owned by SOLA Group Inc., Chicago, which also owns Kitchen & Bath Design News and Residential Design media brands. To learn more, go to www.solabrands.com or contact Paul DeGrandis at [email protected] or Patrick O’Toole at [email protected]
John Burns Real Estate Consulting, LLC provides independent research and consulting services related to the U.S. housing industry. To learn more contact Steve Basten at [email protected]