Homeowner remodeling spending has been on a decline since 2022, but experts predict a rebound in 2025. According to a new report from the Joint Center for Housing Studies at Harvard University, homeowners are expected to increase their remodeling expenditures in the coming years despite recent economic challenges.
Current State of Homeowner Remodeling Spending
The decline in homeowner remodeling spending over the past few years can be attributed to several factors. High costs of labor and materials have made home improvements more expensive, deterring many homeowners from embarking on renovation projects. Additionally, the weakness in existing home sales, driven by elevated home prices and mortgage rates, has further dampened the market. Many homeowners, holding significant equity in their homes, are choosing to stay put rather than move, which has reduced the demand for major remodeling projects.
Economic Factors Influencing the Market
“We’ve been facing some pretty challenging headwinds for remodeling over the last couple years,” says Abbe Will, associate director of the remodeling futures program at the Harvard Joint Center for Housing Studies. These headwinds have included the aforementioned high costs and slow existing home sales. However, the market is expected to begin its recovery in the second half of 2025 as economic conditions improve. Lower interest rates are anticipated to make borrowing more affordable, encouraging homeowners to invest in significant remodeling projects such as kitchen remodels or room additions.
Projections for 2025
While Will does not expect a full recovery within the next year, she is optimistic about the long-term outlook for homeowner remodeling spending. “We’re still projecting that over this coming year into the middle of 2025 that the market will still be a little bit lower than what we saw in terms of spending over this last year,” she explains. However, signs of recovery could emerge as early as the latter half of 2025, with increased spending on both necessary updates to old systems and larger, more ambitious projects.
Future Trends in Home Remodeling
In the meantime, home improvement projects aimed at updating outdated systems and equipment are expected to remain a significant part of remodeling expenditures. As homeowners wait for better economic conditions, smaller projects will likely dominate the market. However, with the anticipated reduction in interest rates, the remodeling industry could see a surge in larger-scale renovations in 2025, providing a much-needed boost to the market.
While homeowner remodeling spending has faced significant challenges in recent years, the future looks promising. As economic conditions improve and interest rates decrease, homeowners are expected to invest more in their properties, leading to a rebound in remodeling spending by 2025. This optimistic outlook provides hope for the industry and homeowners alike, signaling a brighter future for home improvement projects.
