Struggles continue for North American home improvement stores
High interest rates, softening house price appreciation and sluggish home sales are beginning to affect the home improvement market
In the first and second quarters of 2023, sales at home center stores declined year over year, largely in response to the current economic climate. The foreseeable future is not expected to show much promise, with home improvement spending expected to remain lackluster.
Home Depot’s second-quarter sales dropped from $43.8 billion last year to $42.9 billion this year. In the first quarter of this year, sales totaled $37.3 billion, down from $38.9 billion in the same quarter last year.
Lowe’s reported second-quarter sales of $25.0 billion, also down from the identical quarter of last year, when sales totaled $27.5 billion. The company’s first-quarter sales were $22.3 billion, again down from a year earlier, when sales totaled $23.7 billion. Declines in both lumber prices and DIY discretionary demand were two reasons given for Lowe’s drop in sales.
According to Placer.ai, from week 23 of this year through week 36 (early June to mid-September), foot traffic in home improvement stores ranged anywhere from 3-22% lower on a weekly basis than the same period last year. From weeks 8-22, which encompasses the spring, foot traffic was 2-24% greater than in 2022. Weeks 1 through 7 declined 10-33% year over year.
The National Association of Home Builders’ Remodeling Market Index dropped to 68 in the second quarter, with the Future Indicators Index falling by 4 points to 60. Meanwhile, Harvard’s Leading Indicator of Remodeling Activity projected slower growth for the remainder of this year and a decline in year-over-year spending during the front half of 2024. Fastmarkets is calling for repair and remodeling activity to grow only 0.7% this year.