Simply put, everything costs more and consumers are uncertain about the economy.
Prices are increasing across the board due to a combination of factors including inflation, rising raw material costs, and supply chain disruptions. Homeownership and maintenance costs have surged over the past four years. From 1980 to the first quarter of 2024, home sales prices skyrocketed by 560%, with a notable increase between 2020 and late 2022 alone. During this period, median home prices rose sharply by 46%, reaching $479,500 from $329,000. This rapid escalation reflects one of the fastest rates in U.S. history. Concurrently, pandemic-induced inflation has further strained consumers, with prices exceeding 2020 levels by a cumulative 21% as of March 2024, per the U.S. Bureau of Labor Statistics.
Buy now, pay later services (BNPL) to pay for necessities (ie. groceries, bills, personal care items)
While some stats show summer starting off better than expected with gas prices dropping, housing continues to be an inflation hotspot with shelter costs up and more consumers carrying debt and using credit cards for everyday necessities.
Insurance costs have also climbed steeply, fueled by rising home values, increased construction expenses, and heightened frequency of natural disasters. For 2024, homeowners face new challenges as manufacturers navigate economic uncertainties, regulatory changes, labor shortages, and supply chain disruptions. Deloitte's PMI data indicates the prolonged manufacturing through a significant part of 2023. Nearly 90% of manufacturers planned price hikes by mid-2024, highlighting broader economic volatility for the homeowner. This additional financial strain is particularly acute for families planning significant investments in their home’s HVAC systems. The unexpected rise in expenses throws a wrench into carefully laid budget plans and home improvement strategies.
The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—rose to 74.6 (1985=100) from 68.8 last month. Despite this improvement, for the fourth consecutive month, the Expectations Index was below 80, the threshold which usually signals a recession ahead. Consumers may expect things to be a little better than before but they are still not “good enough” to feel as comfortable as they have been in prior years.
In this shifting landscape, consumers are rethinking their financial priorities regarding vital services such as HVAC, plumbing, roofing, solar, and electrical. As expenses rise, homeowners are focusing more on efficiency enhancements and exploring economical options to alleviate financial pressures while aiming for sustainable, long-term solutions.
