Interior Design Services NAICS 541410

May 21, 2025 - Single-Family Housing Starts Decline

• The number of building permits issued for single-family, privately-owned housing units, a demand driver for interior design services, decreased 5.1% in April 2025 compared to March and fell 6.2% year-over-year. Single-family housing starts dropped by 1.6% month-over-month and were down 12% compared to April 2024. Single-family housing completions declined 5.9% in April from the previous month and decreased 12.3% year-over-year. Housing starts in April were pressured by tariff-related economic uncertainty, high mortgage rates, and rising costs for building materials, according to the National Association of Home Builders (NAHB).
• US home builders are dangling more incentives to close deals amid a tepid spring home-buying season that is halfway over, according to The Wall Street Journal. Builders typically notch 40% of their annual sales during the spring, but mortgage rates that are stuck around 7% and a lack of affordability have reduced demand. Builders have increased incentives to bring buyers off the sidelines, including mortgage-rate buydowns, design upgrades, and price cuts. In the first two weeks of April, incentives offered by builders equaled 7.2% of the purchase price, up from 6.1% in January, according to data from John Burns Research & Consulting. Incentives are eating into builder profits during a season that usually sees few discounts, and prices tend to rise.

• The NAHB/Westlake Royal Remodeling Market Index (RMI) reading for the first quarter of 2025 was 63, down five points from the fourth quarter of 2024, according to an April 2025 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 first quarter, the Current Conditions Index portion of the RMI fell four points to 71 from the previous quarter. The Future Indicators Index component of the RMI dropped six points to 55. While the Q1 RMI data was gathered before the announcement and pause of reciprocal tariffs, remodelers are still concerned about trade strife pushing costs higher. However, several housing fundamentals largely support continued remodeling spending growth, including an aging housing stock, rising home equity, and “locked-in” homeowners with low mortgage rates unwilling to sell. Remodeling spending is a demand driver for interior design services.
• Construction spending for residential improvements is forecast to rise 5% in 2025, down from 10% growth in 2024, according to FMI’s second-quarter 2025 North American Engineering and Construction Outlook. Record-high home values and high interest rates will prompt owners to make repairs and upgrades rather than move. Home improvement spending is expected to slip to 2% growth in 2026, but existing home sales, which are a demand driver for remodeling spending, are expected to gain steam in 2027, when home improvement spending will rise by 3%. Spending will continue to rebound to 4% growth in 2028 and 5% in 2029.