Renovation Industry Booms Despite Housing Shortage

According to estimates, a minor kitchen remodel can net a return of 82.7% on a home’s sale. This appears to be a fact that many Americans are taking advantage of as home renovations surge across the nation, driving up profits at large home-improvement stores like Home Depot.

An article by Stock News states that Home Depot and other similar companies are standing to benefit greatly from the combination of low-home inventories and high home prices. These two factors are leading to a surge of home renovation projects, as many look at the chance to flip their homes and sell.

According to the Harvard University’s Joint Center for Housing Studies, the American people are expected to put $316 billion into home remodeling this year. This is an increase from the $296 billion a year earlier.

This will continue to be a boon for contractors as well as big home-improvement companies, who have enjoyed strong revenue because of the changes in the industry. This is despite the small dip seen in the markets during the quarter.

In fact, the only issue that the remodeling industries are seeing comes from a lack of skilled labor to fill project demand. This information comes on behalf of the National Association of Home Builders (NAHB).

“While remodelers continue to see robust demand across the country, the lack of skilled labor continues to be a serious issue,” said NAHB Remodelers Chairman Dan Bawden, a remodeler from Houston. “Remodelers are finding they have to decline projects because they can’t hire enough skilled staff to keep up with the demand.”

The NAHB’s Remodeling Market Index (RMI) showed a reading of 55 in the second quarter of 2017, down three points from the first quarter. This is still the 17th consecutive quarter that the RMI has been above 50, which indicates that the activity in the market is high.

According to Stock News, the renovation boom is likely to lead to profits for both Home Depot and Lowe’s. Analysts from Wall Street predict Lowe’s to reach an EPS of $4.62 this year, up from $3.99 in the year prior. Similarly, Home Depot is expected to hit $7.24, increased from $6.45 last year.

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