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 118,200 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 $651,000 annually.

    • There are more than 118,200 residential remodelers in the US employing nearly 429,700 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 over $430 billion in 2021, an increase of 3.3% year over year.
                          Industry Forecast
                          Residential Remodelers Industry Growth
                          Source: Vertical IQ and Inforum

                          Recent Developments

                          May 20, 2024 - Industry to Return to Steady but Flat Growth
                          • The residential remodeling industry will post slightly better-than-flat sales growth this year, but demand is projected to improve in the following four years. The industry’s year-over-year sales growth was up by 8.3% in 2022, then fell to -2.8% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is projected to see a modest gain of 1% in 2024, then rise 9.5% in 2025. The industry will then see steady but gradually slowing average annual growth of about 7.3% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
                          • A recent downturn in Home Depot’s sales could signal that a decade-long surge in home improvement spending is softening, according to The Wall Street Journal. In May, Home Depot reported first-quarter revenue of $37.26 billion, down 4.2% from the same period a year earlier. The home improvement giant also downwardly revised its full-year guidance to a sales decline between 2% and 5% from a February estimate of flat 2024 growth. Some industry observers suggest homeowners may have completed many of their home projects during the pandemic. Consumers may also be pulling back on their spending amid growing economic uncertainty and high interest rates and inflation.
                          • The recent What Home Buyers Really Want Study by the National Association of Home Builders may offer some insights into the types of improvements homeowners want to make to their homes. Study participants were given a list of more than 200 home features and were asked to rate each as essential, desirable, indifferent, or do not want. Laundry rooms and patios were tied for the top features, with 86% of respondents rating them essential or desirable. Other leading home features included Energy Star windows (83% of respondents), exterior lighting (82%), ceiling fans (81%), garage storage (81%), front porch (81%), and hardwood floors (81%).
                          • Home remodeling spending is expected to continue to soften in 2024, but the rate of the slowdown will moderate by the first quarter of 2025, according to the Leading Indicator of Remodeling Activity (LIRA) report released in October by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to decrease by 3.4% to $468 billion in the second quarter of 2024 compared to Q2 2023. In the third quarter of 2024, remodeling spending will drop quarter-over-quarter to $453 billion, down 7.4% from Q3 2023. Spending will then decline to $449 billion in Q4 2024, down 6.6% from Q4 2023. In the first quarter of 2025, year-over-year spending is forecast to drop 2.6% to $451 billion. While the remodeling market is cooling compared to the highs seen during the pandemic, the Joint Center expects improvements will be supported by a stabilizing housing market, improved materials costs, and the rising age of US housing stock.
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