Spending on home improvement projects will grow by 6% both this year and next thanks to gains in home prices and last year's rise in home sales, but big-ticket projects won't see as big a gain, Fitch Ratings forecasts.
The firm's special report, issued Oct. 10, called for the home improvements product market to grow from $289.7 billion in 2013 to reach $307.1 billion this year and $325.5 billion in 2014. Fitch based its forecast on a broad array of indicators, including the gains in this year's REMODELING Cost vs. Value report; the 4.8% year-over-year rise in existing home sales as of August; the roughly 3% rise in single-family housing starts compared with 2013; easier bank lending standards; and indicators from entities such as the federal government, Home Improvement Research Institute, Harvard University's Joint Center for Housing Studies, the National Association of Home Builders, The Home Depot, and Lowe's.
"Fitch expects spending for big-ticket remodeling projects will continue to lag the overall improvement in the remodeling sector, as credit availability remains constrained," the forecast said. "Nevertheless, there are indications that homeowners, although still cautious, are somewhat more willing to undertake larger discretionary projects and purchases."
The company estimated that home improvement spending grew by 5% in both 2012 and 2013. "The continued improvement in the housing market, as well as strong home price appreciation seen last year and more moderate but steady price inflation in 2014, likely to drive higher spending on home renovation projects in 2014 and 2015."