Yahoo Finance reporter Dani Romero discusses Lowe's Q1 earnings which indicate that home owners are remodeling their homes less and breaks down which areas consumers are downsizing in.
RACHELLE AKUFFO: Well, home remodeling boomed during the pandemic as Americans spent more time than ever in their homes. Now, interest rates are at a 16-year high, and companies pushing to return to office, consumers are also pulling back.
So what is the future of America's home remodeling? "Yahoo Finance's" Dani Romero joins us for more. Hey, Dani.
DANI ROMERO: Hi, there. Well, America isn't as obsessed with those home makeovers. That's the latest that we got from Lowe's first quarter earnings. Customers are pulling away and not really spending on those big ticket items. And not only that, but that's something that even Home Depot said on their earnings call as well. That people are moving away from the big projects and moving towards those smaller end projects.
Some experts, I've even spoken with, have said that customers have swapped out those pricier items for something a little bit less costly, like maybe a less cost faucet.
But another segment that has really not taken a hit is the replacement segment. So that means if you need to replace your roof, your air conditioning unit, your heating and air, those really people are moving forward with those projects since it is out of a necessity. And people are actually planning ahead for those projects.
So it is a softer year. But there is expectation that the home remodeling industry will rebound next year as there's a big anticipation of this housing stock that will need to be pretty much go through a home makeover. And the remodeling cycle starts between those 20 to 39 years. That's when a home is usually in that time when they do need to remodel. So there is a lot of inventory and anticipation for that to happen.
A lot of homeowners are sitting on older homes. So, like I said, next year is going to be a rebound year. That's what experts have said. But another thing that brings me to my point is that more homebuilder-- more homeowners, excuse me, are turning to the new home market. And there could be a different reasons for that too.
There is a perk. One of the perks are is that you don't have to think about remodeling, eventually, when you hit that 20- to 39-year mark. So we saw that today in the new fresh data. Sales of new homes climbed 4.1%. And that's, overall, about 11% higher from a year ago. Rachelle?
RACHELLE AKUFFO: And that is an interesting consideration versus trying to work on a fixer up versus saying, let me, if I can, try to get into a new home with less problems. We want to talk mortgages here, though. Because Rocket Mortgage just announced a program to allow homebuyers to make a 1% down payment. So what impact do you think that program can have?
DANI ROMERO: Well, let's say that it is a step in the right direction because it tackles that affordability concern. And like you said, home buyers will be able to put down at least a little of 1% down on a payment for a home. And so affordability has been a major concern across the housing market. We, obviously, need more homes that are affordable for homeowners. But to have this program by Rocket Mortgage is a step in the right direction. Rachelle?
RACHELLE AKUFFO: All right. Dani Romero with that update there for us. Thank you so much.