The pandemic years were a golden period for the housing market; remote work, drastically low rates, and a deluge of young, hungry American homebuyers accelerated home values, though supply shortages persisted. Accompanying this surge was also a record-high in home improvement spending, taking the remodeling market to $570 billion last year. Now, the lack of housing inventory and the Federal Reserve’s war on inflation have reversed the tide. High mortgage rates have made owning a home unattainable for a majority of homebuyers and limiting for homeowners. However, whether or not high mortgage rates will impact spending on home renovations is another question. Occam finds that while these rates have undeniably “handcuffed” homeowners and spending on major renovations continues to shrink, spending on minor renovations is stable, and growing. Average spending as well as visits per year for big-box home improvement centers such as Home Depot and Lowe’s reveal they are popular as ever, and if consumer sentiment is any indication, they should enjoy further success as they expand.
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