CHM Blog

2024 remodeling trends? A new sink instead of a new bathroom

It was just a few years ago when mask-wearing homeowners lined up at the big box stores with everything from new sinks to lumber hanging off flatbed carts and homes were being remodeled like crazy.

NBC News’ Brian Cheung reports that households are hitting pause on their tub-to-shower conversion plans and buying new shower curtains instead.

“After a pandemic-era renovation craze, the nation’s two largest home improvement retailers say customers are spending less on big projects in favor of cheaper do-it-yourself fixes.” Says Cheung, who says shoppers are cutting back on kitchen and bathroom purchases and becoming more cautious about buying big-ticket appliances.

Lowe’s CEO Marvin Ellison told investors, “Those who did engage in home improvement activities took on smaller, non-discretionary projects with a heightened focus on value,” with sales dropping 6.2% compared to a year ago, which the retailer blamed on “persistent inflation and a stagnant housing market.”

Home Depot was among the brooding, with a 3.5% fourth quarter sales dip from the year before.

Lower cost improvements are still popular, however. Perhaps some new bathroom faucets instead of a new vanity. “Rising prices appear to be the main reason for consumers’ home renovation pullback,” says Cheung.

While the pace of consumer price increases has slowed dramatically, home improvement spending has been cooling for months, Lowe’s and Home Depot have said, after a frenzy to upgrade both newly purchased homes and those where people suddenly found themselves spending more time together during Covid lockdowns.

Today, many who may have counted on a cash-out refinance to streamline that 1996 kitchen don’t like the payments they are left with once they crunch those numbers.

But while the action has died down, households appear to be deferring, not ditching, their more ambitious renovation projects. Perhaps to the more “normal” pre-pandemic levels?

Big box stores reportedly expect many consumers to revisit their pricier plans later in 2024, when there will be pent-up demand that will bring opportunity for spending on larger home improvement projects as the economy improves.

Cheung asked Emmanuel Forge, a traveling contractor who posts home-renovation advice on TikTok if he’s had any trouble finding work lately. His response was no, but admitted that many homeowners underestimate how much projects cost, and some abandon their aspirations after doing the math.

“They didn’t imagine that a bathroom might cost 20, 30 grand to remodel,” Forge said. “They thought it might be five grand and a weekend or two.”

As 30-year fixed mortgage rates dipped below 3% in 2020, existing home sales soared to an adjusted annual peak rate of 6.6 million, according to the National Association of Realtors, reports Cheung. “Americans poured money into fixing up their properties at the same time. Comparable sales skyrocketed 29% at Lowe’s and 25% at Home Depot in the fourth quarter of 2020.”

When interest rates began to soar, however, would-be buyers held back. Fewer home sales means fewer homeowners looking to renovate. Pair that with the never-ending increase of materials costs, supply chain snags that are recovering now, and contractor wage increases and the picture gets clearer. The higher costs are one reason Forge said he could see homeowners opting not only for smaller projects but ones they can tackle on their own.

“Maybe instead of them buying $3,000 of cabinets to install themselves, they’re just going to paint them with $300 of paint,” he said.

NBCNews, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Higher

Mortgage rates are moving higher today. The MBS market worsened by -12 bps last week. This was not enough to increase mortgage rates or fees. The market experienced moderate volatility last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Jobs, 2) The Fed and 3) Manufacturing.

1) Jobs: We get a ton of job and wage related data all week culminating in Big Jobs Friday. The bond market will be very sensitive to the pace of wage increases and number of job additions.

04/01 ISM Manufacturing - Employment Index

04/02 JOLTS

04/03 ADP Payrolls and ISM Services - Employment Index

04/04 Challenger Job Cuts, Initial Weekly Jobless Claims

04/05 Non Farm Payrolls, Unemployment Rate, Average Hourly Earnings, Average Weekly Hours, U6 Underemployment Rate, Labor force Participation Rate.

2) The Fed: We have a packed calendar for Fed speeches this week, the bond market will be keen to see if Waller and Bostic's sentiment is an outlier or main stream among the Fed.

04/01 Cook

04/02 Bowman, Daly, Williams and Mester

04/03 Powell, Bowman, Goolsbee, Barr and Kugler

04/04 Harker, Barkin, Kashkari

04/05 Logan, Bowman

3) Manufacturing: After some very disappointing regional manufacturing data last week, we will get the national ISM Manufacturing on Monday and Factory Orders on Tuesday.

This Week's Potential Volatility: High

This morning markets are taking a hit due to last week's PCE revisions. Volatility has started high and will continue to be high as we get data this week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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