Demand for home remodeling jumped dramatically in the last two years, as Americans hunkered down in their homes and saw everything that needed an upgrade.
Now inflation has raised the prices of many goods people want for a home revamp.
Prices for all household furnishings rose 1.6% in January month-to-month and jumped 9.3% year-over-year, according to the latest consumer price index released by the U.S. Department of Labor on Thursday. The new data showed inflation rose more than expected, and household furnishings prices climbed even faster than those of other goods:
- Floor coverings: 0.8% month-over-month, 7.2% year-over-year
- Window coverings: 1.8% month-over-month, 16.2% year-over-year
- Furniture/bedding: 2.4% month-over-month, 17% year-over-year
- Bedroom furniture: 1.8% month-over-month, 13.7% year-over-year
- Clocks, lamps and decorator items: 2.7% month-over-month, 6.3% year-over-year
- Living room/kitchen/dining room furniture: 2.2% month-over-month, 20% year-over-year
- Appliances: 1.5% month-over-month, 8.5% year-over-year
The price spikes hit as demand for home upgrades soars.
Home improvement spending in 2021 jumped 28% from 2020, according to a recent report from Angi, a home remodeling website. The average homeowner spent $10,636 on an average of 3.7 projects.
The average spending is the highest since Angi began tracking it seven years ago.
“With an increased focus on the home due to the pandemic, home prices rising to the highest on record (nearly 20% year-over-year), and materials prices in some cases 400% higher or more than their pre-pandemic levels, the major growth in total consumer spending on home improvement should not come as a surprise,” wrote Mischa Fisher, chief economist for Angi in the report.
Shares of home remodeling retailers like Lowe’s, Home Depot, Masco and Sherwin Williams all rose sharply last year. But they have so far come off their highs this year as inflation and rising mortgage rates take a bite out of home remodeling. People tend to upgrade home furnishings after they remodel.
A recent report from Harvard’s Joint Center for Housing projected big jumps in home remodeling at the start of this year followed by a peak, then a deceleration to a more sustainable growth rate.
“The rising costs of labor and construction materials, difficulty retaining contractors, and climbing interest rates could discourage owners from undertaking new or larger remodeling projects,” said Abbe Will, associate project director of the Remodeling Futures Program at HJCH.