The US remodeling market soared above $600 billion in the wake of the pandemic and, despite recent softening, remains 50 percent above pre-pandemic levels. However, industry fragmentation, inflation, and a shortage of skilled trade labor jeopardize the ability of the industry to fully meet demand. According to our new Improving America's Housing 2025 report, out today (livestream at 2pm ET), the extraordinary strength of the remodeling market has been supported by the aging of homes and households, as well as record-high property values, but far more investment is needed to address growing needs for energy efficiency and disaster resilience of the country’s 145 million homes.

Five Takeaways from the New Report
 

1) Pandemic Fuels Unprecedented Spending 
Home improvement and repair spending vaulted from $404 billion in 2019 to $611 billion in 2022, and is expected to remain above $600 billion through 2025. On average, homeowners spent almost $4,700 on improvements in 2023, nearly 9 percent above the previous market boom in 2007. 

2) Climate Change Drives Improvement Spending
The growing frequency and intensity of hazard events like hurricanes, wildfires, and flooding increased spending for disaster repairs to $49 billion in 2022–2023, an astonishing leap from $16 billion in 2002–2003. Additionally, the average homeowner insurance premium jumped 17 percent between 2021 and 2023. In 2023, homeowners also spent $139 billion on improvements impacting home energy use, nearly four times the amount in 2003.

3) The Housing Stock is Older than Ever 
With a median age of 44 years in 2023, the housing stock is older than ever, and critical improvements are needed to replace aging components. In 2023, average improvement spending for homes built before 1980 was 24 percent higher than spending on homes built since 2010. Many low-income homeowners live in housing with structural deficiencies or lacking basic features such as running water, electricity, or heat. More financing tools and counseling programs could help preserve the affordable housing stock and ensure that all households live in safe and adequate housing. 

4) Changing Demographics Affect Remodeling Spending
In 2023, owners age 65 and over contributed 27 percent of total improvement outlays, up from 14 percent two decades earlier. And as the population becomes more racially and ethnically diverse, households headed by a person of color contribute more to the home improvement market; in 2023, homeowners of color accounted for 23 percent of improvement expenditures, up from 14 percent in 2003. Immigrant owners also account for a growing share of the market, up from 8 percent of expenditures in 2003 to 13 percent in 2023.

5) Surging Costs and Labor Shortages Hinder Remodelers
Despite a flurry of mergers and acquisitions, the remodeling industry is highly fragmented with large shares of self-employed contractors and small payroll companies. The industry is also hampered by high costs of building materials and labor shortages. Between 2015 and 2023, a majority of remodelers reported a shortage of skilled trade workers. The industry also relies heavily on foreign-born laborers, with immigrants accounting for a record-breaking 34 percent of the construction trades labor force in 2023.

Given the strong foundation and growing needs, residential remodeling is expected to remain a formidable economic sector in the years ahead. But despite unparalleled spending in the last few years, far more investment is needed to improve energy efficiency, disaster resilience, and accessibility for the nation’s 145 million homes.