Remodelers Are Finding New Ways to Adapt to a Record-Breaking Housing Market

It’s no surprise that the housing market is going through big changes, and while prospective homebuyers weigh the pros and cons of making home purchases in the midst of rising mortgage rates and record high home price appreciation, remodelers are springing into action. In response to rapid material price inflation, an ever-growing labor shortage, and long backlogs, remodelers are raising prices and ordering materials in advance, but too much foresight could create unexpected problems as the housing market cools, says John Burns Real Estate Consulting.

As prices for remodeling projects soar to new highs, some consumers are pushing back, and despite backlogs of demand stretching into 2023, declining home values could push some existing homeowners back into the for-sale market.

Based on these responses and our full view of the building products supply chain, we have three primary concerns about the pro remodeling market heading into the second half of 2022.

1. Sticker shock: Customers are seeing massive price increases from remodelers, and they are starting to push back. Watch for more projects hitting “pause.”
2. Risk to backlogs: Some remodelers are now taking deposits for 2023 projects. However, if home values soften or decline, some of this future demand could vanish.
3. Spiking mortgage rates: Rate lock-in and the incredible buildup of housing wealth are longer-term drivers of R&R spending. However, in the short term, rate spikes threaten homeowners’ ability to tap record-high home equity and write large 5- and 6-figure remodeling checks.

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