While residential construction is still years away from full recovery following a nationwide recession, the U.S. home improvement industry has fared much better. According to a report from the Joint Center for Housing Studies of Harvard University.
A number of factors contributed to the strengthening home improvements market, including more people improving their homes rather than trading up, federal and state stimulus programs encouraging energy-efficient upgrades, and a response in the rental market to spruce up properties.
In addition, an improving economy means more discretionary funds for home improvement. Between 2011 and 2013, funds spent on home improvement rose by almost $6 billion, and it was the first increase since 2007.
The spending was disproportionately larger in the nation's top 50 remodeling markets, accounting for almost 60 percent of all improvement spending.
"After years of declining revenue and high failure rates, the home improvement industry is, to some extent, reinventing itself," said Kermit Baker, director of the Remodeling Futures Program at the Joint Center. "The industry is finding new ways to address emerging growth markets and rebuild its workforce to better serve an evolving customer base."
Looking ahead, millennials are the key to remodeling. Their presence in the rental market has already lifted spending in the segment and will continue to spend for decades to come. Baby boomers are also contributing to the industry as they remodel homes so that they can remain safely in them as they age.
Several home improvement retailers are already preparing for what they believe will be a positive spring and summer in 2015. For example, Lowe's has announced they will hire 30,000 seasonal employees to help with the rush. This is about 5,000 more workers than in 2014, which shows optimism that a recovery in the housing market will spur more home improvement projects.
And according to Moody's Investors Service, U.S. retail sales are expected to rise 5 percent in 2015, due in large part to home improvement, drug stores and auto dealers. In fact, Moody's named Home Depot (NYSE:HD) as one of its fastest-growing retailers.
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