CHICAGO — Residential remodelers are expressing “more widespread positive expectations” of a healthy spring remodeling season, although signs are evident of an imminent market slowdown, as high interest rates, rising costs and economic uncertainty continue to challenge the industry.
That’s the key finding of the 1Q2023 Qualified Remodeler/John Burns U.S. Remodeler Index (USRI), a quarterly index that monitors current and future conditions in the nation’s residential remodeling market. The USRI is the product of a joint venture between John Burns Research and Consulting, LLC, a research and consulting firm specializing in the U.S. housing industry, and Qualified Remodeler, a sister magazine of Kitchen & Bath Design News.
The latest USRI posted a rating of 60.6 out of 100, up 2.3 points from the previous quarter, indicating that the professional remodeling industry expanded in the first quarter of 2023. The finding is based on a survey conducted in late March among home improvement professionals, design-build firms and full-service remodelers, including those involved in the renovation of kitchens and bathrooms. A USRI rating above 50 reflects industry growth, while a rating below 50 signals slowing activity.
Although project backlogs remain substantial, “we see signs of an imminent slowdown in remodeling spending,” USRI researchers said. “Remodeling customers are requesting fewer project bids (and a) lower percentage of those bids are resulting in paid projects.” Remodeling customers are also breaking up large remodels into smaller, bite-sized projects with smaller price points, while project postponements are more common, and customers are demanding lower-cost materials and products, the researchers added.
Among other key findings from the survey:
- Despite industry headwinds, professional remodelers expect 2023 revenue to increase 3%-5% on average across all industry segments. Professional remodelers remain confident in their ability to handle project backlogs and to continue raising prices to their customers.
- Available credit for remodeling projects is tighter due to stress in the banking system. More customers are “hitting pause or downsizing ‘want’ projects in favor of continuing ‘need’ projects, researchers said, adding that while product delays and labor shortages are beginning to ease, delays from permitting, inspections and product-quality issues are still prolonging project timelines.