Key Drivers of Growth in the Home Improvement Sector

Current Consumer Spending Trends in Home Improvement

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"So given these trends, as we look at home improvement spend in the near term, we think it's going to be focused more on smaller projects and looking for value, and we are working to position ourselves to be in that space as effectively as we can." --- (LOW, conference, 2024/06/26)

"During the quarter, higher interest rates and greater macroeconomic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects." --- (HD, earning call, 2024/Q2)

"And even as inflation moderates and we see sequential improvement in discretionary category trends, higher interest rates, uncertainty around the future of the economy, continued social and political divisiveness and the upcoming election cycle have consumers concerned about what lies ahead." --- (TGT, earning call, 2025/Q1)

"Now I'd like to provide a quick update on our view of the macro. Uncertainty around interest rate cuts, stubborn inflationary pressures and a consumer still showing a preference towards spending on discretionary services and experiences continue to weigh on the DIY home improvement demand." --- (LOW, earning call, 2025/Q1)

"The decrease in comparable customer transactions reflects the impact of macroeconomic factors, including the continued shift in consumer consumption trends away from goods and towards services and the impact of a high interest rate environment, pressuring home improvement demand." --- (HD, sec filing, 2024/Q1)

E-commerce's Impact on Consumer Spending

E-commerce is significantly influencing consumer spending in the home improvement sector, with companies like Walmart reporting an 18% increase in international e-commerce sales and Home Depot noting heightened interest in financing larger projects. Enhanced e-commerce experiences and expanded product assortments are driving customer engagement and spending.

"E-commerce sales in our international markets were up 18%. Customers are responding favorably to the increased convenience as we scale pick-up and delivery capabilities. In China, we increased e-commerce orders delivered within one hour by 28% to 59 million orders." --- (WMT, earning call, 2025/Q2)

"That's also impacting customers' interest in financing larger projects. Everyone's expecting rates are going to fall." --- (HD, earning call, 2024/Q2)

"John David Rainey: We still have lots of room to improve, but the progress we've made on the e-commerce experience across businesses, across markets, puts us in a position where we can play more offense and be more aggressive as it relates to marketing." --- (WMT, earning call, 2025/Q2)

"If you look across different companies with the consumer, there's varying feedback on green shoots and some COVID winning categories, low end consumer weakness, shopping around occasions." --- (HD, conference, 2024/04/04)

"As we're expanding our assortment, we're more relevant to customers. And I think that's driving some of what we're seeing in general merchandise. Lastly, on e-commerce, I would say that, that continues to have an outsized contribution to our results." --- (WMT, earning call, 2025/Q2)

Housing Market Dynamics and Growth

The housing market is experiencing growth driven by declining mortgage rates, demographic trends, and constrained inventory. However, challenges like supply shortages and inflation are moderating this strength. Homebuilders are adjusting strategies and pricing to meet demand and affordability, positioning for continued revenue growth.

"This performance principally reflected healthy housing market conditions, including a decline in mortgage interest rates since the 2023 fourth quarter, favorable demographic trends, the long-term underproduction of new homes relative to population growth, constrained resale home inventory and demand for homes at our price points." --- (KBH, sec filing, 2024/Q1)

"Based on the current demand conditions and construction cycle times, we continue to start homes at a pace consistent with closing 31,000 homes this year, as well as positioning the company to grow 5% to 10% in 2025, consistent with the multiyear outlook we have discussed previously. Through the first few weeks of July, traffic to our communities has been solid, but depending on how demand conditions and absorption paces evolve up or down in each market over the balance of the year, we will adjust our starts pace as needed. Now let me turn the call over to Bob for a review of our second quarter results." --- (PHM, earning call, 2024/Q2)

"This is most often the foundation of a very strong housing market. But the chronic supply shortage, the impact of interest rates on affordability as well as persistent and stubborn inflation has moderated housing market strength." --- (LEN, earning call, 2024/Q2)

"And we might be moving to a few more town home communities to try to meet affordability targets for a given sub-market. With regard to pricing increases or price decreases, that's occurring very much week to week at a community level by our operators as they're gauging their market demand, their inventory conditions, and their future lot supply." --- (DHI, earning call, 2024/Q3)

"Additionally, based on housing market conditions and anticipated continued improvement in our build times, for the full-year, we expect to generate housing revenues in the range of $6.7 million to $6.9 million, an increase of $100 million at the midpoint versus our prior guidance." --- (KBH, earning call, 2024/Q2)

Technological Advancements Driving Growth

Technological advancements are pivotal in the home improvement sector, as highlighted by Lowe's focus on a total home strategy and productivity improvements. These initiatives reflect a commitment to leveraging technology for enhanced efficiency and growth, aligning with the industry's evolving demands.

"Through collaborations like this, TNB is driving the future of sustainable and efficient energy, ensuring we meet growing energy demands and lead the way in the energy transition." --- (AMZN, press release, 2024/08/21)

"So again, we feel great about the team we have in place. We're focused on executing our total home strategy, and we're driving our perpetual productivity improvement initiatives and we have a capital strategy that has served us well and we're going to be really disciplined around that." --- (LOW, conference, 2024/06/26)

Sustainability and Demographic Shifts in Home Improvement

Sustainability and demographic shifts are pivotal in the home improvement sector, as companies like Home Depot and Lowe's emphasize long-term investments and innovative products that cater to evolving consumer preferences. Initiatives supporting sustainable housing and personalized design reflect a commitment to these trends, driving growth in the industry.

"But given our belief in the long term fundamentals, the strength in home improvement demand, we're focused on the next 5 to 10 to 20 years and we're not going to pull back on investment unless the environment truly demands it and we don't think that we're in that spot." --- (HD, conference, 2024/04/04)

"By leveraging our platform's unique features, such as the ability to upload photos of actual spaces for personalization, we’re not just showing potential—we’re transforming how people experience and interact with color in real-time, ensuring they can visualize and achieve their desired space with confidence and ease. 2025 Color Collection of the Year: 'Naturally Refined' Born out of the cultural shift toward cultivating a slower, more sustainable pace, the 2025 Color Collection of the Year provides an accessible palette of designer-curated hues to help DIYers and design enthusiasts achieve an effortless elegance that makes a home feel peaceful and inviting." --- (LOW, press release, 2024/08/05)

"I’m proud of all the teams that are working together to make significant strides in our sustainability journey." --- (AMZN, Twitter, 2024/07/11)

"An integral part of this initiative includes funding for landlord incentive programs, which are crucial in overcoming the barriers faced by at-risk and homeless veterans in finding sustainable housing." --- (HD, press release, 2024/06/24)

"We continue to gain momentum with our Total Home strategy, reflected in our growth in Pro and online." --- (LOW, press release, 2024/05/21)

Competitive Landscape in the Home Improvement Sector

The competitive landscape in the home improvement sector is characterized by strategic pricing and promotional initiatives. Home Depot leverages seasonal sales and customer-centric product offerings, while Walmart focuses on competitive pricing and disciplined inventory management to navigate market challenges. Home Depot's unique culture further enhances its competitive edge.

"From April 4 - 28, 2024, The Home Depot invites doers to discover and shop incredible discounts on a wide range of spring home improvement essentials, including plants, mulch, landscaping tools, grills, outdoor power equipment and more – prepping for an unforgettable season of curb appeal, spring cleaning, gardening and barbecue-bash hosting." --- (HD, press release, 2024/04/02)

"The increase was primarily driven by the Walmart U.S. segment, due to managing prices aligned to our competitive price gaps, lower markdowns as a result of disciplined inventory management and favorable business mix, partially offset by mix shifts into lower margin merchandise categories." --- (WMT, sec filing, 2025/Q1)

"to improve the interconnected shopping experience nationwide. While we are still in the early days of our expanded partnership, we are encouraged with the results we are seeing. During the second quarter, we leaned into products and projects that are resonating with our customers." --- (HD, earning call, 2024/Q2)

"to make sure our value is right for customers and at the same time have profit grow faster than sales and have some flexibility to make those decisions in a 5 year planning cycle, but also the annual planning cycle and to some degree by quarter because we have that increased flexibility." --- (WMT, event transcript, 2024/06/07)

"And we think the culture is an advantage of the Home Depot that no one has been able to replicate." --- (HD, conference, 2024/04/04)

Future Trends and Growth Forecasts

Future trends in the home improvement sector indicate a growth forecast of 3% to 5% in community counts, driven by strategic investments and operational focus. Companies like Lowe's and Home Depot emphasize long-term planning and commitment to growth, positioning themselves to capitalize on market dynamics and demand trends.

"Given the strength of our land pipeline, we continue to forecast community count growth of 3% to 5% in the third and fourth quarters of this year over the comparable prior periods last year. Consistent with our capital allocation priorities, we are also continuing to return capital to shareholders." --- (PHM, earning call, 2024/Q2)

"And that's what we're really focused on: running the business in the here and now and planning for the future, positioning ourselves for long term growth." --- (LOW, conference, 2024/06/26)

"There will as we grow and as we can prove growth and the ability to generate return on investment, we will always invest in our company." --- (HD, conference, 2024/04/04)

"The cash inflows from operations for the three months ended March 31, 2024 were primarily due to net income of $663.0 million, partially offset by a net increase in inventories of $289.2 million, which was primarily attributable to the increased number of homes in production coupled with land acquisition and development spend to support future growth, and a $54.8 million increase in residential mortgage loans available due to higher loan origination volumes." --- (PHM, sec filing, 2024/Q1)

"Great. So also along the lines of affordability, and I think at points over the last few years, you could argue that 30, 40 basis points might not be as much of an impact to demand trends." --- (PHM, conference, 2024/05/14)

Impact of DIY Culture on Home Improvement Growth

The DIY culture significantly influences home improvement growth, with companies like Lowe's focusing on brand-agnostic products to attract DIY customers. However, recent trends show a decline in DIY sales, indicating a shift towards professional services, as highlighted by Lowe's and Home Depot's performance metrics.

"But concurrently, we want to make sure that we had a really strong private brand portfolio that was high quality on trend, that was affordable, but also that leaned more to brand agnostic DIY customers, specifically in the core categories." --- (LOW, conference, 2024/06/26)

"Ted Decker: And on the Pro/DIY, each were negative for the quarter, more or less the same rate." --- (HD, earning call, 2024/Q1)

"But the unique thing about it is a lot of our business is on the outside, you know, of the home, in the yard, on the exterior during this time of the year, and it's highly dependent on the DIY." --- (LOW, conference, 2024/06/26)

"And comparable average ticket was down 1%, with strength in Pro, partly offsetting the impacts of lower DIY bigger ticket sales and ongoing appliance pricing pressure." --- (LOW, earning call, 2025/Q1)

"So we're not seeing anything that we're surprised by. We expected our pro segment to be stronger than DIY." --- (LOW, conference, 2024/06/26)

Role of Home Renovation Shows in Consumer Trends

Home renovation shows, particularly on networks like HGTV, significantly influence consumer trends by inspiring homeowners to undertake renovations that reflect their evolving needs. As homeowners stay put and invest in their spaces, these shows play a crucial role in driving interest and engagement in home improvement projects.

"This product comes at the perfect time as economic trends show homeowners are staying in their current homes and renovating them to fit their evolving needs, but the cost of renovation is high." --- (LOW, press release, 2024/07/24)

"We are pleased with the results we saw, particularly in categories like riding lawnmowers and outdoor power equipment, where we had experienced some discretionary pull forward over the last couple of years. The trend away from gas to battery-powered products is continuing." --- (HD, earning call, 2024/Q1)

"Customer satisfaction scores were up 100 basis points over last year as we continue to improve our shopping experience for homeowners and pros while at the same time, driving productivity across our company." --- (LOW, earning call, 2025/Q1)

"And there’s still the continued pressure that we see in finance big projects as they called out in kitchen and bath, specifically in the kind of remodeling finance projects, but really pleased with some of the customer engagement, some of those pull-forward categories so far." --- (HD, earning call, 2024/Q1)

"About HGTVHGTV delivers families with relatable stories, superstar real estate and renovation experts and amazing home transformations that inspire a passionate audience." --- (LOW, press release, 2024/08/05)