The  March 2012 Home Improvement products Market sales forecast grew 3.8% in 2011 with an increase in 2012 to 5.0%

With the positive reports of the overall macroeconomic outlook, the March, 2012 IHS Global Insight/HIRI Home Improvement Products Market Forecast for total home improvement product sales for 2011 (+3.8% to $269 billion) increased from September's 2011 forecast (+2.8% at $267 billion).

As employment growth accelerates and housing markets improve in 2014, we expect stronger growth of home improvement sales averaging 5.8% in 2014-2015 with a slight deceleration in 2016. 

The National Economic Outlook

A recent series of positive economic reports gives hope for the emergence of a self-reinforcing cycle of employment gains and consumer spending growth that could lead to faster growth.  But significant hurdles to achieving this remain.  We expect GDP growth of 2.1% in 2012 (up only marginally from the 1.9% projected in our September 2011 report on the home improvement products market.) 

Monthly job gains have increased, and we expect the economy to add about 2 million jobs this year.   However, the labor force will begin to expand as job prospects improve, and we expect the unemployment rate to fall only to 8.1% by year end.

Modest increases in employment and weak wage gains will mean no significant acceleration in disposable income in 2012.  With households remaining much more focused on spending and cautions about rebuilding debt, real consumer spending growth will remain in the 2% range.

Housing starts have shown some life recently, and we have boosted our forecast of continuing gains over the next three years slightly.  We have also shifted our forecast of existing home sales up to an average of 8% over the next three years.

Oil prices are on the rise again, but recession in the Euro Zone and slower growth in China will reduce pressure on commodity prices and limit inflationary pressures.  We expect the overall CPI and core inflation to remain near 2%.

Outlook for the Home Improvement Products Market  

Retail sales of home improvement products showed a resurgence in the second half of 2011 (up nearly 6% compared to the second half of 2010), even as homeowner spending on residential improvements slowed to a 2% pace.  We estimate that total home improvement product sales in 2012 will increase to 3.8% to $269 billion - slightly ahead of our September forecast.

The housing market is showing signs of recovery, which we expect to contribute to further improvement in the outlook for the home improvement products market in 2012.  We expect Consumer Market sales growth to accelerate to 5.4%.  Total home improvement product sales will increase 5.0% to $283 billion. 

Growth of home improvement product sales will not accelerate further until supported by stronger disposable income gains, and that will not happen in 2013 due to rising taxes.  We expect growth to slow to 4.6% in 2013.  Over the following two years, however, we see a stronger cyclical rebound with home improvement product sales growth near 6% in each year.

Growth rates of market size by segment for the current year and 5-year forecast periods are as follows:

	2011	2012	2013	2014	2015	2016
Billion Dollars	269.4	283.0	296.1	313.5	331.9	345.5
% Change	3.8	5.0	4.6	5.9	5.9	4.1