It was a decidedly different feel to this year’s International Builders Show and Kitchen & Bath Industry Show. Instead of heading to sunny Orlando, the RT Marketing team joined the rest of the industry at our computer screens to find the latest in products and industry trends.
The show floor experience ended up being a disappointment as software issues forced the shows to postpone that portion of the event, but Design & Construction Week was still packed with some great information through education, networking and press conferences.
Most notably, economists, builders and remodelers shared their insights on the outlook for the industry in 2021 in several sessions.
The consensus is that 2021 looks to be a good year for housing generally and remodeling specifically.
CoreLogic’s chief economist said 2021 should be a “robust, record year for home improvement spending,” with a 3.7 percent growth rate this year.Frank Nothaft, Chief economist
The National Association of Home Building expects similar growth, said Robert Dietz, the association’s chief economist. Single-family remodeling should be especially strong, while multi-family and commercial spaces will see lower demand.
While remodeling and new construction both crashed quickly in April 2020, the market is now stronger than it was before the pandemic hit. NAHB’s Remodeling Market Index shows remodelers were particularly optimistic in the third and fourth quarter.
“The recovery from the downturn is more than complete,” said Paul Emrath, NAHB vice president of Surveys and Housing Policy Research. NAHB is projecting the final 2020 numbers will show 6 percent growth, followed by 4 percent growth in 2021 and 2 percent in 2022.
Kitchen and bath projects remain strong in the wake of COVID, but exterior projects such as decks, porches and patios also are in high demand. There are several factors driving remodeling demand, Emrath said, including low-interest rates, high property appreciations, people spending more time in their homes and homeowners reluctant to move.
“I think all of these factors will be present in 2021 and 2022, just not as strong,” Emrath said, explaining why NAHB expects slight slowing of growth the next two years.
Remodelers on the panel with Emrath agreed that demand for remodeling bounced back faster than they expected following the spring 2020 drop.
“There is steady consumer demand as Americans are at home much more during the pandemic, this gives homeowners more time and a desire to invest in their homes.”Vince Butler, CAPS, CGR, GMB, GMR, of Butler Builders, a Virginia remodeler.
“We’re seeing more requests for proposals because of the pandemic,” said Tim Lansford, CAPS, CGA, CGB, CGP, CGR, CMP, CSP, GMB, Master CGP, Master CSP, MIRM, of Luxury Homes of Texas. “Because people are using their time at home now to remodel, the demand and backlog for remodeling remains high.”
Everyone agreed that there are two major headwinds for remodeling and housing in 2021: material prices and the labor shortage.
Overall, building material prices climbed 5.4 percent in 2020, led by the record increase in lumber prices – up 156 percent from April 2020 to January 2021. That added nearly $20,000 to the price of the average home in 2020, Dietz said. A quarter of remodelers reported a 20 percent or more increase in material prices last year, according to NAHB data. COVID has also slowed manufacturing, leading to shortages of many items, especially appliances.
The construction labor shortage also continues, even with high overall unemployment. Job openings in the construction industry eased slightly last year, but still remain historically high. That highlights the importance of continuing to promote the benefits of working in construction, Emrath said.
Keep an eye out for our next article on IBSX and 2021’s biggest trends.