Remodeling Market Poised for Growth in 2025

Industry experts from a panel hosted by the National Association of Home Builders (NAHB) during the International Builders’ Show in Las Vegas say an aging housing stock, record levels of home equity and favorable demographics are creating positive growth prospects for remodeling in 2025.

The panel shared that inflation remains a concern as home costs continue to be difficult despite tightening measures by the Federal Reserve. The ongoing housing affordability challenges, like high mortgage rates, signal the demand for remodeling and DIY projects throughout 2025.

The NAHB/Westlake Royal Remodeling Market Index (RMI), a quarterly survey of NAHB remodeler members, provides insight for the remodeling industry.

“Remodeler sentiment has remained in positive territory, well above the break-even point of 50, since the second quarter of 2020,” said Eric Lynch, NAHB economist. “One of the key factors for growth in the remodeling market is the aging housing stock, which continues to drive renovation projects. Home owners are increasingly choosing to tap into their home equity and invest in improvements rather than relocate, creating long-term growth prospects for the industry.”

The RMI survey also showed 98% of remodelers cited most or some of their consumers are familiar with the aging-in-place concept, up from 75% in Q4 2004, showing the increase in awareness among consumers.

Although the industry has seen improvements in the availability of labor and materials over the past few years, both remain ongoing challenges for remodelers, Lynch says.

The RMI survey results show labor shortages in carpenters, framing crews, bricklayers and concrete workers.

“Although the remodeling industry faces certain headwinds, favorable demographics and characteristics of the current housing stock will boost remodeling activity in 2025,” Lynch says. “NAHB is forecasting residential remodeling activity to post a 5% gain in 2025 and a nominal gain of 3% in 2026.”

Alan Hanbury Jr., president of House of Hanbury Builders Inc., was also on the panel and presented best practices for remodelers to grow and manage their businesses’ profitability.

“Many business owners overlook budgeting, yet establishing a clear financial strategy is crucial for controlled growth,” Hanbury says. “By tracking expenses and forecasting needs, business owners can maintain healthy financial practices and avoid unnecessary strain.”

Hanbury also says that focusing on the quality of work over discounting will be a driver of leads, growth and revenue.

“Without monitoring it, you’ll never understand the true cost of your workforce,” Hanbury says. “It’s also very important to have financial targets, which allow you to benchmark against your competitors as well as your past efforts and know where your business stands in the marketplace.”