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2023 First Look: Home Improvement Update

by 
Ezra Carmel
 on 
February 15, 2023
2023 First Look: Home Improvement Update

During the pandemic years, a foot traffic boom was the major storyline in the home improvement retail category as many consumers were spending more time at home and investing in their spaces. But in 2022, macroeconomic headwinds and a pull-forward of demand contributed to a dip in home improvement visits when some non-essential projects were shifted to the back burner. We dove into the home improvement category and its market share leaders – The Home Depot and Lowe’s – for a final take on last year’s foot traffic and a first look at visit metrics for the space in 2023. 

Moving and Improving

Consumers stuck at home drove record foot traffic to the home improvement space in the early days of the pandemic. But surging home sales – of both new and existing units – also drove foot traffic to the category in 2020, since many homeowners took on projects related to fixing up before a sale or settling in after a move. Though fewer consumers bought new homes in 2021 than in 2020, overall home sales in 2021 (sales of both new and existing homes) reached all-time highs and provided a continued lift to home improvement foot traffic. 

In 2022, home improvement retail visits lagged behind previous years as home sales slowed, and with them, the need to complete as many projects. However, If mortgage rates and home prices continue to fall in 2023, as they did in the second half of 2022, home sales could heat up and once again drive significant foot traffic. 

Inflation, Less of a Consideration

The broader trend in the housing sector in 2022 – a home sales slowdown compared to 2021 – and subsequent pullback of demand in home improvement retail contributed to year-over-year (YoY) visit gaps in 2022. But even though home sales slowed significantly in the second half of the year, YoY visit gaps have remained relatively stable since the summer, even narrowing slightly towards the end of 2022. This is likely due to waning inflationary concerns that plagued the category early on in 2022 and a sign that discretionary spending, in terms of home improvement projects, continued to stabilize. 

Staying Put and Fixing Up

The relative stability in the home improvement space demonstrates the tremendous resilience of the category. Although the hot home-buying market is cooling off, year-over-three-year (Yo3Y) foot traffic remains close to pre-pandemic levels due to a shift towards projects aimed at sprucing up a current living space. Demand for projects associated with moving drove home improvement foot traffic when home sales were surging, but it appears that projects that enhance the prospect of staying in place also have the ability to drive visits. 

For a number of months, visits to Lowe’s and Home Depot remained relatively close to where they were pre-pandemic. After reaching 9.7% (Lowe’s) and 8.3% (Home Depot) Yo3Y visit gaps in September 2022, by January 2023, the Yo3Y visit gaps narrowed to just 3.7% and 3.6%, for Lowe’s and Home Depot, respectively. 

Strong Foundations

The home improvement sector looks to be able to capitalize on almost any retail climate. From a pandemic project boom to a home-buying slowdown, the leaders in home improvement retail continue to experience promising foot traffic. 

For updates and more data-driven foot traffic insights, visit Placer.ai.

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