It’s often said that home is where the heart is. But in 2020, it seems that expression could be modified to note that home is just about where everything making up a typical consumer’s life is, as COVID-19 has seriously dimmed most people’s enthusiasm for being out and about.
Consumers are nesting, a conclusion supported by recent data from the online home remodeling platform Houzz. The site reported a 58 percent uptick in project leads for home professionals as of June, as consumers looked to add pools, spas, decks, patios or otherwise spruce up their living environments, per CNBC.
Outdoor projects seem to be especially popular. For instance, Poolcorp, which distributes pool supplies and parts and other outdoor living products, saw its stock hit an all-time high of $332.17 earlier this week, up 98 percent in just five months.
But it's not just outdoor projects that are surging. Houzz told CNBC that kitchen and bath remodeling projects picked up 40 percent in June, while home extensions and additions increased by 52 percent.
Contractor Justin Sullivan told the network: “We’re also hearing that money folks are saving from not going out to restaurants, not eating out, not going on vacations – those things are being saved, and they’re deciding to add that value back into their homes as an investment.”
This week’s earnings reports from Home Depot and Lowe’s also showed that do-it-yourself projects are booming. Home Depot reported that Q2 sales rose 23.4 percent year over year to $38.1 billion. Net earnings clocked in at $4.3 billion, up some 22.8 percent from $3.5 billion a year earlier.
“DIY customers are re-engaging with their homes and with The Home Depot in a meaningful way, and they are engaging across the store,” Home Depot CEO and President Craig Menear told analysts on the post-release call. “We’ve seen strong demand with exterior projects like building decks, sheds, fences and gardens. We’ve also seen strong growth with interior projects, like hard-surface flooring, interior lighting and painting, to name a few.”
Much of Home Depot’s sales of such items are coming from the company’s omnichannel “One Home Depot” initiative. “We firmly believe that our One Home Depot strategy is creating a best-in-class interconnected shopping experience,” Menear said. “We are building unique capabilities that let our customers engage across our digital platforms, our updated physical stores and our enhanced delivery experience.”
Lowe’s reported a similarly strong Q2. Net earnings came in at $2.8 billion on sales of $27.3 billion, well ahead of analysts’ estimates.
CEO Marvin Ellison said the quarter’s success was driven by “consumers’ newly found focus on their homes and completing core repair and maintenance activities.” He said the company has gained sales as consumers’ wallet shares have shifted away from other forms of discretionary spending.
Will the home improvement boom last? Harvard’s Joint Center for Housing Studies expressed some doubts, noting in its latest Leading Indicator of Remodeling Activity (LIRA) report that it expects the remodeling market to cool until at least mid-2021.
“The remodeling market was buoyed through the early months of the pandemic as owners spent a considerable amount of time at home and realized the need to update or reconfigure indoor and outdoor spaces for work, school, play, exercise and more,” said Chris Herbert, the center’s managing director. “However, sharp declines in home sales and project-permitting activity this spring, as well as record unemployment, suggest many homeowners will likely scale back plans for major renovations this year and next.”
The center estimates that annual expenditures for home improvements and repairs will fall by about 0.4 percent over the next year to $326 billion. But Abbe Will, associate project director of the center’s Remodeling Futures Program, said that “given the ongoing uncertainty surrounding the broader impact of the pandemic, the timing on when we’ll reach a bottom in the remodeling market also remains unclear.”
But for now, there is clearly consumer interest in remodeling, and homeowners have been backing up that interest with elevated spending at places like Home Depot and Lowe’s, as well as with the hiring of contractors to do professional renovations. But whether that enthusiasm will persist through what could be an extended U.S. economic downturn remains to be seen.