Americans will likely splash around in the backyard pools they already have this summer, but they’re unlikely to spend much on new ones.
Pool installations were part of a home-improvement boom that swept across the country as Americans stayed indoors during the pandemic, but recent signs suggest demand is slowing as families with extra cash are shifting their money away from renovations and toward vacations.
Pool Corp., a national pool-equipment distributor with a market capitalization of roughly $11 billion, said last week that it expects new pool construction to be down 15% to 20% this year. Some local builders around the country are also feeling the downturn.
Skip Ast III, sales manager for Shasta Pools in metro Phoenix, said 2022 is a tough year for the local industry.
“If 2023 didn’t already seem like a terrible year given the size of the pool, this year is even worse,” he said, but added that the company has managed to adapt.
While consumers aren’t cutting back on record spending overall, those with extra cash on the budget are increasingly spending it on experiences like travel, dining out and other service sector purchases.
Airlines and hotels are expecting a strong travel season, cruise lines are booking records and tickets for concerts and sporting events remain popular and expensive. In contrast, rising food prices and the Federal Reserve’s efforts to keep interest rates high to tame inflation are slowing household purchases of non-essential items and driving the highest interest rates on mortgages and credit cards for longer periods.
The drop in big-ticket home purchases began months ago, and pools aren’t the only backyard amenities facing declining demand: Trager Grills reported a decline in first-quarter revenue, part of a trend that began early in the post-pandemic recovery. But businesses that rely on Americans’ appetite for home improvements are still adapting to tough conditions, including pool builders.
According to real estate analytics firm Cape Analytics, 2020 saw a 20% increase in installations of all kinds of pools, from in-ground and hot tub pools to the typically less expensive inflatable and above-ground models.
At the time, “people were starting to think, ‘OK, we’re going to be at home for a while, so let’s have a vacation in our backyard,'” said Ast, whose family has been in the pool-building business for nearly 60 years. He recalled that suppliers struggled with an influx of orders and contractors were backlogged for months.
Scott Payne, a pool installer in Hatfield, Pennsylvania, said his business has also exploded during the pandemic. “We doubled our revenue in five of our first seven years, two of which were during COVID,” he said. At peak demand, he was getting eight to 10 calls a day.
But despite the recent downturn across the country, Payne and Ast said business is thriving, even as they’ve raised prices due to rising raw material costs. They both said their work during the pandemic has helped them build a foundation to weather this downturn.
Meeting a surge in demand in affluent areas a few years ago helped his company become “ubiquitous” there and still turn a profit, Payne said. Though he has fewer projects underway now, he’s working on bigger, more expensive projects that keep his business profitable.
“A lot of businesses may have pulled back a little bit,” he said. “I can’t say we can’t see that, but we may be a little isolated. We’re still very busy.”
As demand cooled, Ast said some of the unique initiatives Shasta has taken during the pandemic are also paying off. The company introduced an online calculator to help potential customers estimate the cost of their projects and launched a new pool-management division that offers maintenance services after installation. All those factors combined have allowed the company to capture more revenue from fewer consumers across the market, Ast said.
Even the Pool Corporation points out a silver lining in the economic downturn: Many homes have recently built new pools or renovated existing ones, increasing demand for the kind of maintenance services Shasta now provides.
“We are encouraged that sales of maintenance-related products are stabilizing as reflected by increased chemical sales volumes, and equipment sales (excluding cleaners) are down just 2% for the year, improving from a 3% decline in the first quarter of 2024,” the company said in its earnings release.
And as climate change makes heat waves like the one that scorched much of the country in mid-June happen earlier, hotter and more frequently, some consumers may be starting to think of a pool as a necessity.
In Arizona, “the line between luxury and necessity gets a little blurry in the middle of the desert,” Ast said.
