Demographic Change and the Remodeling Outlook

Joint Center projections for the residential remodeling market point to 2.0 percent real growth per year over the next 10 years, somewhat slower growth than over the past 20 years (2.5 percent). By 2025, the home improvement market is expected to reach a new high of $269 billion. Almost half of these gains are expected to result from an increase in average spending per homeowner as incomes and home values rise, while growth in the number of owners will account for the other half of market gains.

Average home improvement spending rises sharply among owners age 35 and over—thanks to higher incomes and growing families—and spending remains at this elevated level until homeowners approach their retirement years. As members of the millennial generation start to move into their peak spending years over the coming decade, their decisions to form households, get married, start families, and buy homes will increasingly set the pace of the remodeling market expansion.

Today, homeowners age 55 and over are responsible for fully half of all home improvement expenditure in the nation. And over the coming decade, aging baby boomers and gen-Xers will play an even larger role in the improvement market. The share of spending by homeowners age 55 and over is projected to increase to over 56 percent by 2025 due to strong growth in the number of owners in this age group (over 20 percent) and over 10 percent growth in real spending per homeowner from 2015 to 2025.

Large shares of remodeling contractors are reporting recent increases in revenue from several specialty segments. Although aging-in-place and energy efficiency retrofits are now fairly well-established market niches that continue to grow in size, a newer area of interest for consumers is in home automation and “smart” home technologies. A recent national survey of contractors found that almost 30 percent reported an increase in revenues from home automation projects as more reliable and less expensive wifi-connected and networked products come to market.