While high mortgage rates and skyrocketing home prices have locked millions of Americans out of buying a median-priced home, the home improvement industry has surged in recent years.
Renovating and remodeling can provide a way to upgrade, improve livability, and increase the value of an aging home. These projects vary significantly in type and cost, from repainting a wall to adding a new room.
American home improvement and repair spending reached an estimated record $567 billion in 2022.
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Homeowners’ median spending on home improvements increased from $15,000 in 2020 to $22,000 in 2022.
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In 2022, 86% of homeowners said they were waiting to address home repairs for financial reasons.
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More than half of U.S. housing was constructed before 1980.
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Spending on DIY remodeling projects reached a record high of $66 billion in 2021.
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Data suggests that residential improvements and repairs will shrink in 2024 for the first time since 2010.
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General home improvement industry statistics
The remodeling industry has surged in the wake of the COVID-19 pandemic, reaching nearly $500 billion in spending in 2021 and an estimated $567 billion in 2022. Studies have found that the pandemic drove an increase in remodels and renovations influenced by the growth of working from home and consumer savings.
Estimated spending in 2022 was more than 40% higher than in 2019, when Americans spent $404 billion on renovations and repairs, primarily on owner-occupied improvement projects.
A 2021 survey of members of the National Association of the Remodeling Industry found that 90% reported a greater demand for contracting and remodeling work during the pandemic.
Despite the uptick in spending and remodeling work, renovations and repairs remain costly for many homeowners. A 2022 ConsumerAffairs survey of 1,078 homeowners found that 92% had outstanding repairs on their to-do list, and 86% said they were waiting on repairs for financial reasons.
Current indicators also point to a slowdown in the growth of the national home improvement and repair industry. Spending on residential improvements and repairs is forecast to shrink in 2024 for the first time since 2010, according to the Leading Indicator of Remodeling Activity.
Home improvement costs
Costs for home improvement projects have increased significantly over the past five years across a wide range of different project types. Rising demand and decreased availability have contributed to growing costs for construction labor and building materials.
According to the 2023 U.S. Houzz and Home Study on renovation trends, homeowners’ median spending increased from $18,000 in 2021 to $22,000 in 2022.
However, many consumers have not been able to keep up with the increases. ConsumerAffairs survey data found just 12% of respondents with serious home repair issues said they were confident they could pay out of pocket to address the repairs.
Costs by project type
According to the Remodeling Cost vs. Value Report, an average midrange kitchen remodel cost $77,939 in 2023, up from $66,196 in 2019, an increase of 18%.
A similar increase has occurred across a wide range of projects, with the cost for an average midrange bathroom remodel up from $20,420 in 2019 to $24,606 in 2023.
Generally, projects involving complete room additions or renovations are the most expensive. In the Remodeling analysis, the most expensive project was an upscale primary suite addition, valued at $325,504 in 2023.
The lowest-cost projects involved the least amount of space, such as a steel entry door replacement valued at $2,214 in 2023 or a garage door replacement valued at $4,302.
What renovations are becoming more common?
Replacement projects now make up a larger share of home improvements than they did more than a decade ago, with discretionary projects making up a smaller share.
Replacements —which typically affect a home’s safety and efficiency, such as roofing, electrical repairs and plumbing projects — made up 48% of home improvement spending in 2021, up from less than 42% in 2007, according to the Joint Center for Housing Studies of Harvard University. The share of discretionary projects —which can involve amenities upgrades but are not essential, such as room additions — fell from about 42% in 2007 to less than 31% in 2021.
The Home Improvement Research Institute’s latest market forecast predicts that the top growing lines for home improvement products include soft-surface floor coverings and electrical supplies. Several lawn and gardening products, such as nursery stock and soil treatments, also ranked in the top ten.
- Soft-surface floor coverings
- Electrical supplies
- Hard-surface floor coverings
- Lawn and garden equipment and supplies
- Nursery stock and soil treatments
- Paint sundries and other supplies
- Other building materials
- Roofing and supplies
- Paint and preservatives
- Tools
Home improvement market forecast
While spending on home remodeling is forecast to shrink in 2024 for the first time since 2010, according to the Leading Indicator of Remodeling Activity, industry members still have a positive outlook for business.
The National Association of Home Builders’ latest NAHB/Westlake Royal Remodeling Market Index found that a majority of remodelers had a positive view of the industry’s future heading into 2024.
Though the index had ticked up in the fourth quarter of 2023, it was lower than at any other point in the past three years, as higher costs remain an issue.
Remodeling activity is also forecast to fall in 2024 because of high interest rates and weak home sales, but projected spending is set to be significantly higher than before the pandemic.
There remains a large market of homes in need of repairs. The latest U.S. Census Bureau American Community Survey found the median year built for housing structures was 1979, more than four decades ago. Among an estimated 141 million housing structures in the U.S., 12% were built before 1940.
DIY projects on the rise
Amid the high costs of remodeling projects, a rising number of homeowners are taking on home improvement projects themselves.
The number of homeowners who took on one or more do-it-yourself (DIY) remodeling projects increased by 17.1% from 2019 to 2021, compared to just 10.7% growth for owners doing professionally installed projects2. DIY project spending also grew to a record high of $66 billion in 2021.
A fall 2021 survey of 1,182 homeowners found that 35% hired a professional for their entire remodeling project, compared to 22% who did their entire remodeling project themselves.
FAQ
How big is the home improvement industry?
American home improvement and repair spending reached an estimated record $567 billion in 2022.
What are the most expensive renovations?
Remodeling projects involving entire rooms or greater square footage are typically more costly. The most expensive include room additions, kitchen renovations and bathroom renovations.
Is the home improvement industry growing?
While spending on home improvements has surged during and following the COVID-19 pandemic, the industry is forecast to shrink in 2024 for the first time since 2010, in part because of the high costs for building materials.
Will a remodel add value to my home?
The value a renovation provides varies by project type. In 2023, a garage door replacement provided a 103% return on investment, compared to a midrange bathroom addition that provided just a 30% return on investment. Read more here about factors to consider when evaluating a home remodeling project.
References
- Zhao, N. “NAHB Priced-Out Estimates for 2023.” National Association of Home Builders. Evaluated March 2, 2024.Link Here
- Joint Center for Housing Studies of Harvard University. “Improving America’s Housing 2023.” Joint Center for Housing Studies of Harvard University. Evaluated March 2, 2024.Link Here
- Houzz Research. “2023 U.S. Houzz & Home Study: Renovation Trends.” Houzz. Evaluated Feb. 20, 2024.Link Here
- U.S. Census Bureau. “Year Built and Year Moved In.” U.S. Census Bureau. Evaluated March 2, 2024.Link Here
- National Association of REALTORS Research Group. “2022 Remodeling Impact Report.” National Association of REALTORS. Evaluated March 2, 2024.Link Here
- Remodeling Futures Program. “Downturn in home remodeling may bottom out in 2024.” Joint Center for Housing Studies of Harvard University. Evaluated March 2, 2024.Link Here
- Remodeling by JLC. “Remodeling 2023 Cost vs. Value Report.” Zonda Media. Evaluated Feb. 20, 2024.Link Here
- Remodeling by JLC. “Remodeling 2019 Cost vs. Value Report.” Zonda Media. Evaluated Feb. 20, 2024.Link Here
- Home Improvement Research Institute. “Navigating the Home Improvement Market Given the June 2023 U.S. Size of Home Improvement Market Forecast.” Home Improvement Research Institute. Evaluated March 2, 2024.Link Here
- National Association of Home Builders. “Remodeling Market Sentiment Improves in Fourth Quarter.” National Association of Home Builders. Evaluated March 2, 2024.Link Here
- National Association of Home Builders. “2023 Q4 NAHB/Westlake Royal RMI Full Report.” National Association of Home Builders. Evaluated March 2, 2024.Link Here
