The high volume of home renovations undertaken during the pandemic may finally have peaked, as Home Depot announced 2023 sales may decline as much as 7% to 13% – its first drop in sales in nearly 15 years.
This dip, paired with the findings of a recent study on home improvement investments across America, indicates that folks on the East Coast, in particular, are stepping back from renovations in hopes of keeping more cash liquid during this inflation era.
A new study conducted by Contractor Growth Network assesses state home improvement spending between December 2021 and December 2022. Its findings reveal that most expenditures were on the east side of the United States.
Home Improvement Sales Down
According to Home Depot’s August news release, sales are down 2% from last year, reflecting a total sales of $42.9 billion in the second quarter of 2023. This shift is significant, marking a regression from the three-year sales growth they saw in and around the COVID-19 pandemic.
Rising mortgage rates suggest that individuals unable to shoulder a new mortgage may be taking on the renovation of their current home instead, but the data shows this isn’t the case. This information from the world’s largest home improvement retailer may instead indicate a shift away from do-it-yourself home upgrades in recent months.
When assessed alongside new research on states stating that homeowners spent the most on home improvements in 2022, it is clear that residents along the country’s eastern side stand to save the most money by stepping back from home improvement projects.
States That Spent The Most Last Year
Contractor Growth Network’s study assessed information from Consensus Business Builder and Statista, looking at median household income versus average home improvements to identify the states that spent the most money on renovations from December 2021 to December 2022.
Topping the list is New Jersey, followed by Maryland, Massachusetts, Connecticut, and Hawaii, with California, Virginia, New Hampshire, Washington, and Colorado rounding out the top 10 list. New Jersey is first on the list, with an estimated annual spend of $4,634 on renovations, equaling 5.1% of residents’ median household income of $89,703.
In second place, Maryland sees 4.9% of funds allocated to home improvements, with $4,516 out of $91,431 in income committed to renovations.
Third place goes to Massachusetts, where the population of 6.95 million residents spends $4,473 out of $89,026 on home beautification and updates.
Connecticut comes fourth, at $4,356 on average for its 3.61 million residents. This spending reflects 5.2% of the median household income of $83,572.
Hawaii follows in fifth place, with a total population of 1,442 million, spending an average of $4,279 annually on home improvements. The median household income of $93,547 means that residents dedicate 4.8% of their yearly income to this spending category.
Sixth, with a population of 39.24 million, is California. These West Coast households spend an estimated $4,268 on yearly home improvements, 5% of the $84,097 median income.
Virginia comes in seventh place, spending 5.2% of the median income ($80,615) on home improvements for a total of $4,215 per year.
New Hampshire, home to 1,389 million people, ranks eighth for spending the most on home improvements. The median household income in New Hampshire is $83,449, and households spend $4,145, or 4.9%, on home makeovers each year.
Ninth place goes to Washington, where households spend $4,076 on yearly home improvements. This is 4.9% of the median household income, $82,400.
Rounding out the top 10 is the state of Colorado. With a population of 5,812 million, this state has a median household income of $80,184, and 4.8% of this income is dedicated to home improvements, totaling $3,929 annually.
A spokesperson at Contractor Growth Network comments on the geographic spread: “It’s interesting that New Jersey, Maryland, Massachusetts, and Connecticut dominate the top four, suggesting that home makeovers are more popular on the East Coast.”
Freeing up Capital
It’s difficult to predict how the drop in Home Depot sales may affect these figures for the 2022-2023 year. This marked shift in demand for home improvement supplies may mean Americans are holding on more tightly to their money.
These variable expenses are likely the first to go for individuals looking to set aside more cash in the coming months.