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
Jan 17, 2025 - Remodeling Spending to Improve in 2025
- Home remodeling spending is expected to see slight gains in 2025 after two years of weakening expenditures, according to the Leading Indicator of Remodeling Activity (LIRA) report released in January by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to increase 0.4% to $513 billion in the first quarter of 2025 compared to Q1 2024. In the second quarter of 2025, remodeling spending will rise quarter-over-quarter to $505 billion, up 0.7% from Q2 2024. Spending will then increase to $506 billion in Q3 2025, up 1.2% from Q3 2024. In the fourth quarter of 2025, year-over-year spending is forecast to rise 1.2% to $509 billion. Joint Center expects improvements will be supported by rising home values, a steady labor market, and gradually improving sales of existing homes. Better retail sales of building materials and solid remodeling permitting activity should also support home improvement spending.
- In the third week of January 2025, commodity prices for lumber – a key input for residential construction – were about $590 per thousand board feet – up about 11% from a month earlier, and about 8% higher than they were a year earlier, according to Trading Economics. Lumber prices may be moving higher amid improved mortgage applications and anticipated interest rate cuts by the Federal Reserve. The threat of increased tariffs on Canadian lumber imports may also be putting upward pressure on lumber prices. Production cuts and mill closures by some US lumber producers have increased dependence on Canadian lumber suppliers.
- Several industry insiders expect the residential construction sector to improve in 2025, according to Engineering News-Record. Dodge Construction Network forecasts that US residential construction starts will rise 11.5% in 2025 after posting gains of 7.8% in 2024. However, residential growth will be led by a 15.7% rise in the multifamily market in 2025, while single-family starts will increase by 9.5%. Advisory firm FMI expects total construction spending to rise by only 2% in 2025. However, while spending gains vary significantly by market segment, FMI expects residential to be a bright spot in 2025.
- Some building contractors are concerned that the Trump administration's promises of tariffs and a tougher stance on immigration could increase their costs and make their labor difficulties worse, according to The Wall Street Journal. Some industry observers suggest Trump’s plan to deport undocumented workers could cause labor shortages. In California, New Jersey, Texas, and Washington, DC, immigrants make up more than half of the construction workforce, according to the Harvard Joint Center for Housing Studies. Nationwide, undocumented workers make up about 13% of the construction sector’s workforce, according to the Pew Research Center. Trump’s proposed 25% tariffs on goods from Canada and Mexico could drive up construction costs for key inputs, including softwood lumber, cement, gypsum (used to make drywall), and iron and steel. However, some builders are optimistic that Trump’s deregulation plans could reduce construction costs.
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