In December 2022, the Consumer Price Index (CPI) fell for the first time since May 2020, according to a new study from [1]Today's Homeowner [2]. However, prices still remain significantly elevated compared to a year ago. Data from the Bureau of Labor Statistics [3] (BLS) shows that consumer prices increased by 6.5% from December 2021 to December 2022.
Within the home services industry, home improvement and household furnishing prices climbed even faster than non-household goods. According to the BLS, household furnishings and supplies rose by 7.3% over the same period, with some categories seeing even larger price spikes.
Main Findings
- More than half of homeowners are adjusting their home improvement planned spending due to the economic climate.
- Nine in 10 homeowners have home improvement projects planned for 2023.
- With high interest rates, homeowners are hesitant to borrow money for home improvement projects.
- To manage rising costs, homeowners–especially Generation Z and millennials–are leaning toward DIY.
[4]
Adjusting Home Improvement Spending
With inflation and the recessionary climate, many homeowners are reducing their home improvement spending. About 28% and 22% of homeowners say that in 2023, and relative to last year, they are spending either significantly and slightly less on home improvements, respectively.
Another 33% of homeowners are neutral when it comes to current economic realities, while less than 17% report that the state of the economy is having no impact on their home improvement spending.
In some states, residents are adjusting their spending more than others. In four states (Connecticut, Wisconsin, New Mexico, and Nebraska), 60% or more of respondents cited that they plan to reduce their spending on home improvement projects in 2023. This figure is largest in Connecticut at nearly 72%.
Meanwhile, in Vermont and the District of Columbia, less than 40% of survey respondents plan to reduce their spending. Several other less populated states also show up in the 10 states where the fewest homeowners are reducing their spending. They include Delaware, South Dakota, and Wyoming–all of which also have populations less than one million people.
Home Improvement Plans for 2023
Despite this reduced spending, our data shows that more than nine in 10 homeowners plan to take on at least one home renovation in 2023. Most homeowners expect to complete one or two home improvement projects this year. Specifically, about 29% of respondents plan to tackle one home improvement project, while nearly 38% expect to take on two.
Less than 12% of homeowners have no home improvement projects planned for 2023. Meanwhile, only about 9% have four or more projects on the docket for this year.
[5]Through these projects, many homeowners are generally looking to improve their living space. Nearly 69% of respondents list this as a primary reason for wanting to complete their planned home improvement projects in 2023. The next-most popular reason for wanting to complete one or more renovations is to fix something broken (53.1% of respondents).
Despite incentives in the Inflation Reduction Act of 2022 [6] to make homes more energy-efficient to reduce costs and transition to cleaner energy sources, less than one in four homeowners list making their space more eco-friendly as one of the main reasons for completing renovations.
Similarly, homeowners are less keen on completing renovations before a home sale. Only about 13% of homeowners list renovations prior to listing a home for sale as one of their primary reasons for taking on improvement projects. Of 2.5% respondents that listed other, popular reasons include modernizing and better utilizing their space.
Managing Rising Costs
One primary way to manage costs when it comes to home improvement is by doing it yourself (DIY) rather than hiring a contractor. In fact, about 71% of homeowners say that inflation has caused them to do a project themselves rather than hire a professional.
[7]
This trend is especially true among younger homeowners. Roughly 76% of homeowners between the ages of 18 and 24 are doing a project themselves rather than hiring a contractor due to inflation. That figure is nearly nine percentage points lower for homeowners 55 and older.
To read the full report, including more data, charts and methodology, click here [1].