In response to the new construction slow down, builders report going where the money is—remodeling. It's a common strategy during leaner times, and the latest industry outlook from the National Kitchen and Bath Association (NKBA) reports growing confidence from construction professionals as they take advantage of remodeling's strength.
Those builders dipping toes into remodeling report stronger sales from the fourth quarter of 2022 to quarter one of 2023, according to the Q4 2022 NKBA/ John Burns Kitchen & Bath Market Index. Not all remodelers are fans of this strategy. BOWA CEO Larry Weinberg anticipated more home builders entering the remodeling space in a previous Pro Remodeler thought leader prediction, and noted his concern for the shift.
“There are going to be some local home builders jumping into our market because although growth might be slowing in remodeling, in the new home industry, it’s a real downturn,” writes Weinberg. “We see that every time with local home builders.”
Home Builders Shift Gears
With higher mortgage rates and an uncertain economy, more homeowners have opted to stay put and remodel their homes, boosting remodelers’ business and setting the segment up for a stronger year than its new construction counterparts.
“Remodeling slowdowns tend to follow housing market slowdowns, are typically shorter and less severe than new construction,” writes Carlos Martin, director of the Remodeling Futures Program at the Joint Center for Housing Studies at Harvard University. “It’s no secret that rapidly rising interest rates are currently driving a housing market slowdown, but there are numerous tailwinds that we expect to support an expanding remodeling market.”
Remodeling slowdowns tend to follow housing market slowdowns, are typically shorter and less severe than new construction.
Still, respondents to the NKBA’s survey reported while remodeling projects were out there, the scope of projects is smaller. More homeowners seek smaller project scopes or choose to break larger projects into more affordable stages. In response, construction pros seek to increase their project volume to balance the smaller projects.
Fewer construction professionals reported cancellations in projects in the fourth quarter of 2023 compared to the third quarter. The projects most likely to be canceled exceed $50,000 or come at less than $20,000.
We at "Envision Design Build" are seeing an increase in remodeling projects, from whole house to large kitchen and outdoor spaces. We like Remodeling. There are more challenges with the construction and design.