Residential Remodelers NAICS 236118

May 16, 2025 - Remodeling Spending to See Moderate Growth

• Home remodeling spending is expected to see slight gains through 2026 after two years of weakening expenditures, according to the Leading Indicator of Remodeling Activity (LIRA) report released in April by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to increase 0.8% to $505 billion in the second quarter of 2025 compared to Q2 2024. In the third quarter of 2025, remodeling spending will rise to $506 billion, up 1.4% from Q3 2024. Spending will then increase to $512 billion in Q4 2025, up 1.8% from Q4 2024. In the first quarter of 2026, year-over-year spending is forecast to rise 2.8% to a record $526 billion. Joint Center expects improvements to be supported by increasing home values, a steady labor market, and gradually improving existing home sales. However, uncertainty stemming from trade strife and waning consumer confidence could put downward pressure on remodeling demand.
• The continued rise in the median age of US housing stocks may present opportunities for residential remodelers. In an April report, National Association of Home Builders analysis of US Census Bureau data showed that nearly half of owner-occupied homes were built before 1980. In 2023, the median age of owner-occupied homes reached 41 years, up from 31 years in 2005. Median home age has increased since the Great Recession when new housing production dropped dramatically. Since then, home building activity has not kept pace with demand. US homes require more maintenance and repairs as they age, driving remodeling spending. The lock-in effect of low mortgage rates during the pandemic is also prompting homeowners to renovate rather than move and face a higher interest rate.

• 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.
• 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.