Residential Remodelers NAICS 236118

Jul 16, 2025 - Remodelers’ Sentiment Drops

• The NAHB/Westlake Royal Remodeling Market Index (RMI) reading for the second quarter of 2025 was 59, down four points from the first quarter, according to a July 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 second quarter, the Current Conditions Index portion of the RMI fell five points to 66 compared to Q1 2025. The Future Indicators Index component of the RMI declined by four points to 51. While the RMI remained solidly in positive territory in Q2 2025, the NAHB noted that high interest rates and waning consumer confidence continue to pose challenges to the remodeling industry.
• Amid increased conversions and demolitions, the US supply of office space is on pace to shrink this year for the first time in 25 years, according to real estate services firm CBRE and reporting by The Wall Street Journal. The shift marks a break in a years-long office space glut as federal tax breaks, low interest rates, and unprofitable start-ups fueled office overdevelopment. Matters were made worse as the pandemic reduced demand further. Converting unused offices into residential space seemed like an obvious solution, but until recently, such projects were unprofitable. However, lower property values, local government incentives, and zoning law changes are making conversions practical.

• North American spending on residential improvements in 2025 is expected to grow by 1% after increasing an estimated 10% in 2024, according to FMI’s third-quarter 2025 North American Engineering and Construction Outlook. The aging of the US housing stock and high home values drive demand for residential improvement spending, but high interest rates and elevated materials and labor costs weigh on home improvement spending. FMI expects residential improvement spending growth to remain flat at 1% in 2026, then rise 3% in 207 and 4% in 2028 and 2029.
• According to the National Association of Home Builders (NAHB) Q1 2025 Remodeling Market Index (RMI) survey, only 56% of remodelers do work that helps homeowners age-in-place (AIP). The Q1 2025 results marked the lowest percentage of remodelers who do AIP work since the NAHB began asking AIP-related questions as part of the RMI in 2004. The NAHB suggests the drop in AIP remodeling work may be a result of increased economic uncertainty and high interest rates. Among respondents to the Q1 RMI survey who did AIP work in the previous 12 months, 87% reported installing grab bars. Other popular types of AIP remodeling projects included curb-less showers (78% of remodelers), higher toilets (71%), widening doorways (52%), and ramps or lower thresholds (44%). Long-term demand for AIP work is expected to remain strong amid the aging of the US population and housing stocks.