A recent report by the Joint Center for Housing Studies of Harvard University showed that more consumers are interested in home improvement and remodeling this year because of upswings in housing market conditions in 2014. But where are they shopping? According to TraQline, The Stevenson Company’s market share survey of 500,000-plus consumers, retail giants like Amazon, and home improvement stores Home Depot and Lowe’s, have seen significant increases in several key metrics related to market share.
“Retail giants like Amazon, and home improvement stores Home Depot and Lowe’s, have seen key metrics improve in 2015.”
Remodeling spending up
Home improvement spending is projected to kick into high gear in 2016 after years of declining growth figures. The JCHS report, the Leading Indicator of Remodeling Activity, explained that annual spending on home remodeling is expected to jump from 2.4 percent in the fourth quarter of 2015 to 4 percent in the first quarter of 2016, before it grows to 6.8 percent by the second quarter. According to Chris Herbert, managing director of Harvard’s center, the first half of 2016 is anticipated to be a boon for remodeling expenses.
“Home improvement spending continues to benefit from the last years’ upswing in housing market conditions including new construction, price gains, and sales,” Herbert stated. “Strengthening housing market conditions are encouraging owners to invest in more discretionary home improvements, such as kitchen and bath remodeling and room additions, in addition to the necessary replacements of worn components, such as roofing and siding.”
In Herbert’s view, one of the primary drivers of this remodeling expense growth is the increase in home sales. Typically, there is a direct correlation between remodeling expenses and home sales, as opposed to home improvement spending for non-movers. Further, with increasing home prices and equity nationwide, new homeowners are motivated to remodel, which has boosted the home improvement product market.
With growth in home prices and increasing home equity nationwide, new homeowners are motivated to remodel.
Consumers shopping at big-box stores for home purchases
As of the four quarters ending June 2015, big-name retailers like Home Depot, Lowe’s and Amazon all saw their market shares increase in at least one of several key metrics, including Unit Share and Dollar Share.
For instance, Amazon had statistically significant increases in Unit Share and Dollar Share, based on TraQline figures. Lowe’s also grew in Dollar Share. While Home Depot increased the number of home improvement shoppers at the store, the percent of those actually buying decreased – leading to flat share changes in both units and dollars.
Overall, Home Depot’s share of products over $166 rose significantly to 21.1 percent of the market in the second quarter of 2015. Lowe’s, on a related note, had similar figures at 17.7 percent. This suggests that more expensive purchases for home repairs, replacements and remodels are being purchased at the home improvement giants.