Private spending on home improvements

Private spending on home improvements is projected to reach $295.6 billion in 2025, representing robust growth of 6.8% compared to the previous year. This significant expansion reflects renewed homeowner investment in residential properties as housing market conditions stabilize and accumulated home equity provides financing capacity for major renovation projects. Rising home values continue supporting borrowing ability through home equity lines of credit and cash-out refinancing options, enabling homeowners to fund substantial improvement initiatives. Energy efficiency upgrades have gained particular prominence, driven by government tax incentives and utility rebate programs that reduce upfront costs for HVAC system replacements, insulation improvements, and solar panel installations. Kitchen and bathroom remodeling projects remain dominant spending categories, as homeowners prioritize high-impact renovations that enhance both functionality and property values. However, elevated material costs and labor shortages continue constraining project scope and timelines, forcing many homeowners to delay or scale back improvement plans despite strong underlying demand for renovation services.

Home improvement spending has exhibited extraordinary volatility over the past five years, reflecting unprecedented shifts in housing market dynamics and consumer behavior patterns. The period began with spending at $268.8 billion in 2020, representing exceptional 8.0% growth as pandemic lockdowns drove massive increases in residential renovation activity. This surge reflected the convergence of multiple factors including remote work requirements that necessitated home office creation, increased time spent at home highlighting improvement needs, and government stimulus programs that provided funding for discretionary spending on property enhancements.

However, this pandemic-driven boom proved unsustainable, with spending declining to $270.8 billion in 2021 despite minimal 0.7% growth, followed by a significant 5.9% contraction to $254.7 billion in 2022. This adjustment period reflected the normalization of renovation demand as travel and entertainment options reopened, reducing both time and financial resources available for home improvement projects. Supply chain disruptions and material cost inflation also constrained project feasibility, forcing many homeowners to postpone planned renovations until market conditions improved.

The trajectory stabilized in 2023 with spending reaching $254.3 billion, representing minimal 0.2% decline, before recovering strongly in 2024 with remarkable 8.8% growth to $276.8 billion. This resurgence reflected improved material availability, moderated cost inflation, and renewed homeowner confidence supported by continued home value appreciation and accumulated household savings from the pandemic period.

The composition of home improvement spending has evolved significantly during this period, with energy efficiency and smart home technology projects gaining prominence relative to traditional aesthetic renovations. Outdoor living space enhancements including decks, patios, and landscaping have also captured increasing budget allocation as homeowners prioritize property functionality and entertainment capabilities. Professional contractor services have experienced strong demand growth, though supply constraints have extended project timelines and elevated labor costs across most renovation categories. DIY projects have also increased in popularity, particularly for smaller-scale improvements, as homeowners seek to manage costs while addressing maintenance and upgrade needs.