Residential Remodelers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 127,400 residential remodeling contractors in the US remodel houses and other single and multi-family dwellings. Popular projects include additions to indoor and outdoor living space, and kitchen and bathroom remodels. Other sources of revenue include providing maintenance/repair services and updating structures to meet new building codes and energy efficiency requirements.
Cyclical Demand
Remodeling activity is highly cyclical, and follows broader economic cycles, according to the Joint Center for Housing Studies Harvard University.
Sensitivity to Interest Rates
Most homeowners rely on loans to finance remodeling projects.
Industry size & Structure
A typical residential remodeling firm employs three workers and generates about $604,000 annually.
- There are more than 127,400 residential remodelers in the US employing nearly 445,000 workers and generating over $77 billion in annual revenue.
- The majority of establishments are small, with over 80% of residential remodelers employing fewer than five workers.
- Business models range from small family-owned firms, which may perform remodeling work themselves, to individuals serving as general contractors who hire employees and subcontractors to complete larger remodeling projects.
- The 50 largest residential remodeling firms (500 to 999 employees) generate only about 8% of the industry’s revenue.
- Residential remodeling spending reached about $480 billion in 2023, but is expected to moderate to $450 billion in 2024, according to Harvard’s Joint Center for Housing Studies.
Industry Forecast
Residential Remodelers Industry Growth
Recent Developments
Aug 19, 2024 - Remodeling Spending to Remain Robust
- Home remodeling spending is expected to gain ground in the first half of next year after an anticipated softening in late 2024, according to the Leading Indicator of Remodeling Activity (LIRA) report released in July by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to decrease 3% to $474 billion in the third quarter of 2024 compared to Q3 2023. In the fourth quarter of 2024, remodeling spending will drop quarter-over-quarter to $450 billion, down 6.3% from Q4 2023. Spending will then rise to $451 billion in Q1 2025, down 2.8% from Q1 2024. In the second quarter of 2025, year-over-year spending is forecast to drop 0.5% to $466 billion. While the remodeling market is cooling compared to the highs seen during the pandemic, the Joint Center expects improvements will be supported by homeowners making repairs and upgrades at a more sustainable pace.
- In July, prices for materials used in residential construction were essentially flat compared to June, but were up year-over-year, according to National Association of Home Builders analysis of Bureau of Labor Statistics data. Producer prices for residential building inputs increased 2.01% in July 2024 compared to July 2023; prices were up .04% from June. With a year-over-year rise of 14.2%, copper and copper products saw the most significant price jump in July, followed by read-mix concrete (5%) and gypsum building materials (4.2%). Softwood lumber prices in July were down 13.1% from a year earlier, and prices for steel mill products declined 14% over the same period.
- The NAHB/Westlake Royal Remodeling Market Index (RMI) reading for the second quarter of 2024 was 65, down one point from Q1 2024, according to a July 2024 report by the National Association of Home Builders (NAHB). Any RMI reading over 50 indicates that most remodelers feel market conditions are good. In the second quarter, the Current Conditions Index portion of the RMI fell one point to 73. The Future Indicators Index component of the RMI also dropped one point to 58 compared to Q1 2024. The NAHB noted that most remodelers continue to see steady demand, although some have reported slowdowns. Some wealthy homeowners are paying cash for remodeling projects amid high interest rates.
- The US home improvement market is expected to remain solid over the next few years, according to FMI’s third-quarter 2024 North American Engineering and Construction Outlook. Home improvement project spending will rise 4% in 2024 as homeowners primarily focus on maintenance and repairs amid high materials costs and interest rates. Home improvement is projected to moderate to 3% annual growth in 2025 and 2026 before rising 4% in 2027 and 6% in 2028. The median age of an owner-occupied home is more than 40 years, which helps drive home improvement spending. To keep new home prices lower amid higher interest rates, builders have reduced custom and luxury options in recent years, which could spur buyers to upgrade newer homes.
Get A Demo
Vertical IQ’s Industry Intelligence Platform
See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.
Build valuable, lasting relationships by having smarter conversations -
check out Vertical IQ today.