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Home Improvement Spending Poised for Even More Growth in 2016

Posted November 13, 2015 by EnerBank USA

people walking around the city with furniture

There is a lot of good news right now for home improvement contractors. Contractors might have even more to be happy about next year if predictions about remodeling activity in 2016 hold true.

According to the Leading Indicator of Remodeling Activity (LIRA), annual spending on home improvements next year could increase 4 percent (and your home improvement business needs to be in a position to claim a piece of that pie).

Let’s first examine why home improvement activity is on the rise, which experts mostly credit to the recent uptick in home sales in the United States.

“Recent homebuyers typically spend about a third more on home improvements than non-movers, even after controlling for any age or income differences, so increasing sales this year should translate to stronger improvement spending gains next year,” said Chris Herber, Managing Director of the Joint Center for Housing Studies of Harvard University.

But it is not just home sales pushing home improvement spending higher, but also the age of the housing stock (the average age in the United States is 37 years old), as well as an aging population and the desire to make homes more efficient because of rising energy costs.

The National Association of Homebuilders (NAHB) expected residential home improvement spending to jump 3 percent in 2015 and an additional 1.5 percent next year, and the home improvement industry could experience record spending in 2015 after $300 billion was spent on discretionary projects two years ago, states a new study called “Emerging Trends in the Remodeling Market” from the Joint Center for Housing Studies.

Much of that money was spent on projects like kitchen and bath improvements, room additions, porches, decks and other upgrades and repairs.

“Existing home sales and house prices both hit soft spots in 2014 that dealt a glancing blow to residential remodeling businesses,” said Paul Emrath, NAHB Vice President for survey and housing policy research. “We expect those drags are behind us in 2015, an outlook consistent with the optimism expressed by remodeler members in our recent Remodeling Market Index (RMI) survey.”

Still, home improvement contractors have fared much better in the wake of the recession than the housing market as a whole, researchers say.

Growth Opportunities in the Home Improvement Industry

Harvard researchers also focused recently on three areas where even more growth in the home improvement industry could occur in the future.

First, since many houses need to be made more accessible for aging homeowners, this area is poised for explosive growth.

Next, researchers say much of the future growth in the home improvement market will come from sustainability (“green”) projects. These projects already account for about 30 percent of the revenue for some home improvement and remodeling businesses.

Finally, a resurgence is under way for capital investment in rental properties. The demand is high for rental units everywhere, and experts suggest that because of the housing crisis, many of the 3.6 million single-family homes added to the rental pool from 2006 to 2013 will need improvements, signaling more home improvement spending on the horizon.


Optimism was high among home improvement contractors in the second quarter of 2015, as those surveyed by the NAHB reported that the number of calls for bids, appointments for proposals and remodeling projects on backlog increased from the previous quarter. Only in some areas of the rental-housing market did remodeling activity decrease in the second quarter.

With some experts expecting home improvement activity to pick up even more in 2016, how will you prepare now to acquire lots of new customers?

These resources can help:

How to Gain New Leads Through Social Media Strategies

Turning Technicians into Salespeople (Without Them Knowing it)

Online Reviews: What You Need to Know

7 Tips for Improving Customer Experience

15 Sales and Marketing Tips for the Home Improvement Contractor