Home Improvement Group Sees Rebound in 2010

Tampa FL, March 10, 2009–U.S. home improvement sales may see their biggest decrease in 32 years and their third straight annual decline, according to a new forecast by the Home Improvement Research Institute/IHS Global Insight.

The forecast predicts a 6.4% drop in home-improvement product sales to $272 billion in 2009, on top of a downwardly revised 2008 decline of 4.5%.

That would represent the biggest decrease since the Home Improvement Research Institute began industry outlooks in 1977, said Executive Director Fred Miller. The largest previous decline was a 5.2% drop in 1991.

HIRI’s members include Home Depot, Lowe’s. Black & Decker Corp. and many other retailers and manufacturers.

The federal stimulus package is “too small and too slow” to generate a robust recovery in industry sales quickly, the trade group said in a press release late Friday. Its forecast assumes that real GDP will decrease 6% in the first quarter and will remain lower in the second quarter, that housing starts will bottom in the second quarter and that the unemployment rate will top out at 9.4% in the first half of 2010.

Deflation is also expected to threaten industry sales this year.

Industry product sales this year to the consumer market are expected to fall 5.5% and sales to professionals 9%. Consumers buy about three-fourths of all U.S. home improvement products, and the group’s figures do not include installation costs.

Sales to the consumer market fell 3.8% to $215.2 billion in 2008, dropping across nearly all channels of distribution. Sales to remodelers and other professionals fell 6.5% to $75.3 billion.

A backlog of projects that homeowners have deferred and the impact of the federal stimulus package are among factors that should help sales rebound in 2010 with a 6.9% increase, according to HIRI’s forecast.

“We expect an acceleration of the cyclical rebound in home improvement product sales in 2011, with a 12% increase in the consumer market propelling total home improvement product sales to double-digit growth again for the first time since 2004,” the group said.