2023 began with homeowners and pros reporting low confidence and expectations for the home improvement industry. Now, pro and homeowner sentiments are changing. Here's a look into what we are seeing:
In the Eyes of Trade Professionals
Half of contractors said product and material issues pose the greatest challenge to their businesses this year. But this sentiment fell from 52% in quarter 1 to 48% this quarter, suggesting product and material issues are improving as the year progresses.
According to pros, delays in their existing projects or postponements of their future projects occurred about a third of the time. Usually caused by material availability, these deferments dropped in frequency by five percentage points between quarters 1 and 3.
In the face of these obstacles, pros changed their behavior. Most common in quarter 3, 38% of contractors tried a new product for the first time. We saw a significant drop in contractors who “tried a new brand or manufacturer for the first time” between quarters 2 and 3, signaling that they may be settling back into re-ordering behaviors with brands they’ve used, whether historically or recently.
Just under 70% of contractors reported experiencing increased costs for products and materials this quarter, but as the year began, 75% said they experienced increases. In response to increased costs, pros usually bought a cheaper brand/product or purchased less than planned according to findings in the 2023 Pro Home Improvement Monthly Tracker.
“This may remain a common theme as many pros gained comfort over the past few years with trying something new,” said Grant Farnsworth, President of The Farnsworth Group. “And as we know from a lot of our research month over month, year over year, their satisfaction with trying a new brand or trying a new product is very, very high.”
Based on findings in the Farnsworth Quarterly Contractor Index, pros reported 73% confidence in their firm’s ability to get new business in the best six months and said they are booked out almost nine weeks on average. This is an encouraging rebound considering contractor confidence fell to 56% in quarter 2.
Still, contractors’ purchasing is the smaller portion of the home improvement market and can be conflated with homeowners’ do-it-for-me (DIFM) projects based on market sizing research published by The Home Improvement Research Institute. About 40% of homeowners said they hired a pro to complete all or some of their project.
In the Eyes of Homeowners (DIY and DIFM)
Still, most consumer purchasing can be attributed to do-it-yourself (DIY) projects. Homeowners said they chose DIY projects instead of DIFM when they were able to do the work themselves or when it was cheaper if they do the work themselves according to findings in the 2023 Home Improvement Monthly Tracker.
“Budget is driving a lot of decisions. In fact, the primary reason to postpone or delay a project is budget,” said Farnsworth. “But also, it’s the main reason that folks DIY the project themselves.”
The cost of projects caused the biggest challenge to homeowners completing their projects: 54% of the time in quarter 3 and 50% of the time in quarter 1. In quarter 3, an average of 35% of consumers spent $100-$499 on their projects.
Like pros, homeowners also experienced project delays and postponements although only 30% of time or less. In quarter 3, “budget/financial reasons” caused these delays about half the time; however, this position was markedly improved since quarter 1 being five percentage points less common now.
Of homeowners committed to continuing with their projects, 26% said they tried a new product for the first time. Even so, 58% of homeowners in quarter 3, more than in quarters 1 or 2, did not try anything new for their project.
Almost half of homeowners report their projects cost more than they expected. And even though this experience eased slightly in quarter 3, consumers considered alternatives to keep moving forward. Purchasing less than planned occurred with 20% of homeowners in response to changes in product prices. In the midst of the increasingly competitive building products market, brands must be strategic in order to gain market share among DIYers.
Consumer confidence, according to the Conference Board, saw its highest quarterly average for the year: 110.6 in quarter 3 (a 5.7-point increase since quarter 1). Just under half of homeowners expect to start another improvement, repair or maintenance project in the next 30 days, meaning a positive outlook for home improvement.
“And as we’ve said time and time and time again, pay attention to that project intent, because it is a great leading indicator of what retail home improvement sales may be,” said Farnsworth. “Dig deep into your product and the related projects to understand where those opportunities may lie for your organization.”
Looking Ahead to Customer Behaviors in 2024
These broader trends reveal how the home improvement market progressed throughout the year. But what about your customers specifically? Our dive into tactics for increasing market penetration describes how go-to-market strategies tailored to your customers can increase sales and profit margins. This all starts with getting a deep understanding of your customer, their purchase drivers, and how they compare options when making a purchase decision. You can secure this knowledge through custom usage and attitude market research.
Improvements in the industry provide a strong base as we approach quarter 4. We can expect this progress to continue, even if only modestly, through the end of the year and into 2024.
Written By Kelsey Henry
As Research Project Assistant, Kelsey is in her element designing documents, proofing data or text, and, otherwise, helping Project Managers deliver insightful reports to clients. Concept testing and usability studies pique her curiosity most, but she often works on reports covering industry trends or professional perspectives.
Prior to joining The Farnsworth Group, Kelsey worked as a business and science reporter for Purdue Research Foundation honing her skills in secondary research and interviewing. She also worked as a barn manager and ‘MacGyver-ing’ equipment into extended life. When she’s not drafting and proofing reports for clients, you can find Kelsey wiping the horses’ noses at her barn.