John Burns Real Estate Consulting released its updated forecast for the remodeling industry, and its outlook calls for 7.9 percent growth in 2018 to $374.4 billion in activity. For 2019, the growth continues at a 10 percent rate to $385.4 billion in activity.
According to Burns economist Todd Tomalak, four key drivers for the industry include rising incomes, higher house-price appreciation, a marked increase in activity from first-time home buyers, and continued volumes of storm repair work.
First-time home buyers conduct 18 percent more remodels than average owners, Tomalak said, as they are buying homes that need updates. House prices are expected to rise 6 percent nationally in 2018, which drives increased home equity and higher remodeling demand. Meanwhile, real wage growth is projected by the Atlanta Fed to hit 3.2 percent in 2018, while inflation remains low at 2.2 percent. The labor shortage is cited as the primary reason for the delay in storm repairs to the Gulf Coast region, which continues into 2018.
The Burns forecast splits remodeling and repair activity into large-project work (anything over $5,000) and small-project work (anything under $5,000). Small-project activity will experience the most robust rates of growth, according to the forecast—11.2 percent in 2018 and 11 percent in 2019. Big-project activity growth will be less strong at 6.5 percent in 2018 and 3.8 percent in 2019.
This article first appeared on our sister site, Qualified Remodeler.