We are constantly adapting to the ebbs and flow of the housing and building industry. DIY customers are reportedly buying more and remodelers are getting their hands dirty again. As a CMO, we need to consider how these changes affect our marketing strategy and spending.
Strong spending on gardening equipment, furniture, and building materials in March could mean homeowners are busily preparing to make their homes more attractive to buyers. Retail and food service sales rose 0.8% from February to a seasonally adjusted $411.07 billion, the Commerce Department reported. But while overall sales were up 6.5% year-over-year, building material and garden equipment(U.S. Census retail trade category NAICS 444, Building Material and Garden Equipment and Supplies Dealers, including home centers, hardware stores, and garden equipment dealers) jumped over 14%. That bodes well for the housing market, says Susan M. Wachter, professor of real estate and finance at the Wharton School of the University of Pennsylvania on a recent SmartMoney post. “These retail sales are another an indicator of better home sales ahead,” she says.
Lowe’s recently announced a 13% spike in sales to $11.63 billion helped by an unusually mild winter and better cost control, while Home Depot’s fourth-quarter earnings rose 32% to $774 million. Wachter says the double-digit sales increase in Lowe’s other items like kitchen and bathroom cabinets – typically a big consideration for house-hunters — and new flooring further shows that homeowners may be preparing to increase the appeal of their homes.
By 2019, category leaders posted higher annual net sales than 2018, per company filings. Home Depot reported about $110.2 billion in net sales for fiscal 2019, while Lowe’s reported about $72.1 billion. That momentum points to sustained demand for building materials and home improvement projects leading into 2020.
Others say home improvers may be biding their time. From the same mentioned SmartMoney post mentioned above, “Lawn care and showcasing nice furniture are always an important aspect of trying to sell a home,” says David Abuaf, chief investment officer at Hefty Wealth Partners in Auburn, Ind. “But I think the March retail figures are driven more by maintenance and upkeep rather than a desire to sell immediately.”
But there have been several other encouraging signs that the housing market may be regaining its pep. Existing home sales recorded the strongest February in five years, according to the National Association of Realtors and, according to the most recent Commerce Department figures, the number of new single-unit houses authorized for construction rose nearly 5% in February. For the full year 2019, U.S. housing starts reached about 1.29 million and building permits about 1.39 million, the highest since 2007, according to the U.S. Census Bureau and HUD. “We expect to see gains through the all-important summer months,” he says. And for homeowners, Wachter says, “It’s better to fluff now to attract buyers.”
Our industry is contingent on the economy and the fickle supply and demand of our customers. We have to make sure we are prepared from season to season, and with the increase of sales at two of the largest building product retailers in our country, we can expect demand to rise as well.
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