Home Improvement Group Sees Rebound in 2010

Tampa FL, March 10, 2009--U.S. home improvement sales may see their biggest decrease in 32 years and their third straight annual decline, according to a new forecast by the Home Improvement Research Institute/IHS Global Insight.

The forecast predicts a 6.4% drop in home-improvement product sales to $272 billion in 2009, on top of a downwardly revised 2008 decline of 4.5%.

That would represent the biggest decrease since the Home Improvement Research Institute began industry outlooks in 1977, said Executive Director Fred Miller. The largest previous decline was a 5.2% drop in 1991.

HIRI's members include Home Depot, Lowe's. Black & Decker Corp. and many other retailers and manufacturers.

The federal stimulus package is "too small and too slow" to generate a robust recovery in industry sales quickly, the trade group said in a press release late Friday. Its forecast assumes that real GDP will decrease 6% in the first quarter and will remain lower in the second quarter, that housing starts will bottom in the second quarter and that the unemployment rate will top out at 9.4% in the first half of 2010.

Deflation is also expected to threaten industry sales this year.

Industry product sales this year to the consumer market are expected to fall 5.5% and sales to professionals 9%. Consumers buy about three-fourths of all U.S. home improvement products, and the group's figures do not include installation costs.

Sales to the consumer market fell 3.8% to $215.2 billion in 2008, dropping across nearly all channels of distribution. Sales to remodelers and other professionals fell 6.5% to $75.3 billion.

A backlog of projects that homeowners have deferred and the impact of the federal stimulus package are among factors that should help sales rebound in 2010 with a 6.9% increase, according to HIRI's forecast.

"We expect an acceleration of the cyclical rebound in home improvement product sales in 2011, with a 12% increase in the consumer market propelling total home improvement product sales to double-digit growth again for the first time since 2004," the group said.