The post-pandemic remodeling boom appears here to stay
Homeowners have spent a record amount on remodeling recently despite natural disasters, labor costs and shortages, inflation of building materials and disability needs that are presenting challenges for the nation's 145 million homes.
Abbe Will, Associate Director of the Remodeling Futures Program at theHarvard Joint Center for Housing Studies, said the remodeling market has experienced "phenomenal" growth, with spending reaching unprecedented heights in recent years.
Spending on home remodeling reached an estimated $603 billion in 2024 and is expected to tick up to $608 billion in 2025, according to a report from the center.
In 2022, remodeling spending soared to a record $611 billion, up from $496 billion in 2021, driven by a post-pandemic boom from remote work, massive growth in home equity, savings and aging homes.
The post-pandemic remodeling boom wasnt expected to last, but spending has remained elevated.
Still, many homes are in desperate need of improvements asthe median age of homes has climbed.
The cost to address deficiencies across homes is $149.3 billion as of 2022, including $97.9 billion for owner-occupied and $51.5 billion for renter-occupied properties, according to the Federal Reserve Bank of Philadelphia.
Even the staggering sum won't do more than maintain the status quo.
Unfortunately, most of these investments would only bring the homes up to standards of basic adequacy and would not fully address needs for improved accessibility, energy performance, or disaster resilience, Harvard JCHS said.
What is causing homeowners to remodel?
Natural disasters are among the biggest drivers of remodeling, with spending picking up particularly in the South and Midwest. Spending for disaster repairs totaled $49 billion in 20222023, up from $16 billion in 20022003 after adjusting for inflation, Harvard JCHS said.
Disaster improvements include strengthening roofs against high winds, elevating entire homes, boosting HVAC and water equipment above flood levels and replacing exteriors with noncombustible alternatives.
Energy efficiency is another big driver of remodeling.
In the last two decades, energy-efficiency spending on improvements such as roofing, HVAC and windows has nearly quadrupled, Harvard JCHS said.
In 2023, Harvard JCHS said projects that affected home energy use accounted for about $140 billion in homeowner improvement spending, which is 34% of the nation's total remodeling spending.
Homeowners across all age groups are also increasingly making their homes more accessible for disabilities.
Harvard JCHS said owners undertaking a remodeling project for accessibility reasons reached a record of 3.2 millionin 2022-2023, up from 2.3 million in 20182019.
Remodelers have alsoreportedbig interest in accessibility: 63% said they installed home improvements to support aging in place in 2023, with 93% of them saying bathroom remodels were the focus.
What is challenging remodeling?
A shortage in skilled laborers is squeezing the remodeling market.
In 2023, 63% of professional remodelers said they were having some or serious labor shortages, including hiring carpenters, masons, electrician and plumbers, according to the National Association of Home Builders.
A large and enduring labor shortage in construction trade occupations jeopardizes the ability of the remodeling industry to meet current and future demand, the report said.
Building materials are another concern.
The prices of building materials, such as lumber, plastic and insulation, have far outpaced inflation.
For instance, Harvard JCHS said prices for plastic construction products have risen 50% from 2019 to 2024, compared with a 22% increase in the Producer Price Index, which tracks average selling prices among domestic producers.
Getting the materials is proving more of a challenge, too.
Contractors reporting shortages of key building materials skyroekcted to 65% in 2022, up from 14% in 2018, according to NAHB.
"In addition to costs, material availability continues to be a greater concern than before the pandemic despite major progress," Harvard JCHS said.
Sign up below for The Daily Consumer, our newsletter on the latest consumer news, including recalls, scams, lawsuits and more.
Posted: 2025-03-23 23:33:52
