Trends and Challenges in the Remodeling Industry

The remodeling industry is experiencing significant growth, driven predominantly by the aging of homes and increasing household demands. According to the Improving America’s Housing 2025 report, the industry must make substantial investments to meet rising expectations for energy efficiency and resilience against disasters.

Market Growth and Expenditures

Home improvement spending surged dramatically from $404 billion in 2019 to $611 billion in 2022, and is forecasted to maintain above $600 billion through 2025.

Key Areas of Investment

In 2023, nearly half of home improvement expenditures—approximately 49%—were directed towards major categories such as roofing, windows, and HVAC systems. On average, homeowners invested around $4,700 on renovations that year.

Demographic Shifts in Home Improvement Spending

An analysis by the Joint Center for Housing Studies (JCHS) underscores a shift in homeowners’ demographics contributing to the remodeling market. Notably:

• Households led by people of color accounted for 23% of remodeling expenditures, compared to 14% in 2003.
• Immigrant homeowners increased their share from 8% in 2003 to 13% in 2023.
• Homeowners aged 65 and older contributed 27% to total home improvement spending in 2023, a rise from 14% in 2003.

The Aging Housing Stock

With a median age of homes reaching 44 years in 2023, the need for reinvestment is clear. Homes built prior to 1980 reflect significantly higher spending on improvements, with a 24% increase compared to newer constructions and a 76% higher maintenance budget. Many low-income households continue to endure structural deficiencies and lack basic necessities.

Challenges in the Remodeling Sector

The recent rise in disaster events—such as hurricanes, wildfires, and floods—has intensified repair costs, leading to nearly $49 billion in spending for disaster repairs in 2022 and 2023. Concurrently, homeowners’ insurance premiums soared by 17% during the same period.

Energy efficiency has become a critical focus, with homeowners spending $139 billion on energy-related improvements in 2023, a significant increase from past years. As Carlos Martín, director of the remodeling futures program at JCHS, noted: “Each energy-related improvement presents an opportunity to cut greenhouse gas emissions, increase the efficiency of the housing stock, and reduce utility costs.”

Labor shortages present another obstacle for the industry. The remodeling landscape remains fragmented, relying heavily on self-employed contractors. Between 2015 and 2023, many remodelers reported a persistent lack of skilled labor, particularly in trades such as carpentry, plumbing, and electrical work. In 2023, immigrants represented about 34% of the construction workforce.

The Road Ahead

Looking to the future, Chris Herbert, managing director of JCHS, remarks, “Given the strong foundation and growing needs, residential remodeling is expected to remain a formidable economic sector in the years ahead.” While recent expenditure trends indicate robust activity in the remodeling market, ongoing investment is crucial to enhance energy efficiency, disaster resilience, and accessibility for the nation’s 145 million homes.

As the landscape evolves, it becomes imperative to create tools and counseling programs to aid homeowners, ensuring that every family occupies safe and adequate housing.