Home Improvement Sector Projected to Reach $575.5B by 2031May 25th, 2023 by Travis Rains
After three years of “unprecedented growth” for the home improvement sector, Home Depot reports that its figures for the first quarter of 2023 are down from Q1 2022.
The big box retailer reports sales of $37.3 billion for the first quarter of 2023, marking a 4.2% decrease from the same time last year. Comparable sales in the U.S. decreased by 4.6% and net earnings were $3.9 billion, down from $4.2 billion in Q1 2022. While near-term outlooks are “uncertain,” both Home Depot and research firm Fact.MR are optimistic about long-term home improvement demand, with the latter predicting record revenues by 2030.
“After a three-year period of unprecedented growth for our sector, during which we grew sales by over $47 billion, we expected that fiscal 2023 would be a year of moderation for the home improvement market,” said Ted Decker, Home Depot chair, president and CEO. “Our sales for the quarter were below our expectations, primarily driven by lumber deflation and unfavorable weather, particularly in our Western division as extreme weather in California disproportionately impacted our results.”
Based on first-quarter sales, Home Depot now expects its sales and comparable sales to decline by between 2% and 5% for 2023 as a whole, compared to 2022. Richard McPhail, executive vice president and CFO, again attributes the negative impact to lumber deflation, weather, softening of demand and “continued uncertainty regarding consumer demand.”
“While the near-term environment is uncertain, we remain very positive on the medium-to-long term outlook for home improvement and our ability to grow share in a large and fragmented market,” said Decker.
According to Fact.MR, the global home improvement market is currently valued at $342 billion but is projected to jump by a compound annual growth rate of 6.7% by the end of 2030. That would bring revenue for the home improvement sector to $575.5 billion by the start of 2031.
The research firm reports that renovation and remodeling projects currently drive the home improvement market. Homeowners are investing in upgrades with respect to improved functionality, energy efficiency and aesthetics. Eco-friendly building materials are also increasing in popularity.
While many homeowners are pursuing DIY options for fiscal reasons, Fact.MR notes that complex and large-scale projects have still led to growth in contracting and remodeling services. Growth was also realized with respect to online and e-commerce.
“Consumers are increasingly turning to online platforms to research products, compare prices, and make purchases,” according to Fact.MR. “Online retailers and home improvement marketplaces have experienced substantial growth.”