Sales surged during stay-at-home orders, and some think they’ll plummet later in the year as a result. One wild card: Will a second COVID-19 surge create all-new demand?
Stuck at home in a paralyzing health crisis, people across America finally tackled long-delayed, home-improvement projects that are giving a boost to the do-it-yourself and handyman segments of the U.S. economy.
Where is the home-improvement category headed?
- As Americans stayed at home, the do-it-yourself and home service industries gained momentum from March through early May.
- The immediate forecast remains strong for do-it-yourselfers. The garden segment is exploding at most retailers.
- Will the momentum last through year’s end? Analysts offer mixed predictions. The biggest wild card: Will the nation endure a challenging Round 2 of infections as summer slips into fall and winter?
In Louisville, Kentucky, the COVID-19 crisis has been a completely unexpected boon for Max Daugherty’s outdoor living contractor business. New decks, patio upgrades, backyard spruce-ups – the calls are pouring in.
His crew working in Louisville is booked through August, but Daugherty is still wary of what’s around the corner for deck rebuilds and other big residential projects in an economy rocked by the pandemic. His guesses about how stay-at-home orders and restricted travel might shrink revenues were so dead wrong starting in March that he’s still inclined to play conservative now rather than expand the business.
“I prepared myself for the worst, and it was completely the opposite,” said Daugherty, owner of Max Building Designs in Charlestown, Indiana.
He’s now delivering 25 quotes a week for prospective jobs, compared with eight to 10 estimates this time last year. But “if we invest in another truck for another crew and things go bad, I’ve got an investment sitting there that’s not returning.” And he’d also face laying off workers he’d just hired on.
Such is the dilemma in the red-hot hardware, paint and home services arena around the country, as one of the world’s strangest second quarters barrels into its final month.
The pandemic has led many homeowners across the country to pounce on DIY home improvement projects during stay-home orders. And as a result, hardware, home improvement and farm supply stores – which the federal government deemed essential businesses – have seen a massive surge in demand for tools, paint, lawn and garden goods, and treated lumber.
Added to that is a higher demand for cleaning supplies, security systems, safety gear, sidewalk chalk and activity kits for youngsters, said Randy Rusk, national spokesman for Do It Best, a cooperative of hardware, lumber, and building materials stores in 50 states and more than 50 countries.
But analysts and marketing experts in the home and hardware industry are cautious. They predict a mixed bag in spending through the end of this year, dragged down by little or no construction in some states and nagging uncertainties surrounding the economic toll from the pandemic.
Smaller, in-home projects have been the bright spot in the sector. During the past two months, as unprecedented restrictions sent workers home and consigned people to work in bedrooms and at kitchen tables, the home services industry saw consumers flip their attitudes about their surroundings.
At first they were scared. Then, they began looking around their homes and decided they needed to get on projects they’d put off for years, said Larry Janesky, a Connecticut-based contractor with 300 dealers and 700 employees refurbishing attics, basements and roofs across the U.S. Basement waterproofing and refinishing projects took off in the past month or so because people realized they needed to upgrade space for a home office. Roofing also has shot up, Janesky said.
Before the outbreak, spending on home remodeling was expected to post annual growth of 3.9% by the first quarter of 2021. But the latest data rolling together, actual and forecasted impacts of the economic shutdown, have led to predictions of declines this year, with more of a drop off into 2021, according to Harvard University’s Joint Center for Housing Studies.
The uncertainty has analysts offering a mixed forecast for what will happen in the category later in the year.
“Whether confidence returns to undertake large projects could be dictated by the depth and duration of the economic and housing market decline,” wrote Wedbush analysts led by Seth Basham in a note about Home Depot, MarketWatch reported earlier in May.
Home construction, home sales and the value of existing homes could take a hit, and homeowners’ moods could play a big part, said Chris Herbert, managing director of the Harvard-based center.
It predicts more affordable metros in the Midwest and Sunbelt – including Cleveland, Cincinnati, Charlotte, Atlanta, Tampa and Phoenix – to see some gains through the year, of about 2 to 3%.
One big driver to watch is how small businesses rebound in coming months.
“If the government tells entrepreneurs to stay home, you can’t open … we’re going to have some real problems,” Janesky said. “I’m cautiously optimistic, depending on how long things drag on.”
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