by Despite some economic malaise among consumers, the market for remodeling projects remains strong
WASHINGTON — Home remodeling continues to remain of interest to the home furnishings industry for the simple reason that it represents interest and spending on what amounts to consumers’ largest investment. Whether it’s the addition of a sunroom or a landscaping project, the spending encourages people to continue improving their living spaces, which in turn can improve their personal lives.
That interest bodes well for furniture spending as the need also arises to update various rooms in the home with some of the latest styles that continue to evolve in the marketplace.
Thus, it makes sense to pay close attention to consumer interest in renovations and what types of rooms and home improvement projects are getting the most attention.
Two recent surveys offer a glimpse at the state of home renovations at a time when the industry continues to grapple with issues ranging from high interest rate levels that affect home sales, to what many perceive as still sluggish retail sales affecting the entire industry.
Recently, the National Association of Home Builders released its NAHB/Westlake Royal Remodeling Market Index for the second quarter. The index came in at 59, which was down four points compared to the prior quarter. The NAHB said that while this remains in positive territory, it’s only the second time the index has dropped below 60 since the first quarter of 2020.
With each question measured on a scale of 0-100, the survey asks remodelers to rate five components of the remodeling market as “good,” “fair” or “poor.” Thus a reading of 50 is more in positive territory indicating a higher number of those surveyed view conditions as good versus poor.
Here is a quick recap of the survey results for the second quarter:
+ The Current Conditions Index averaged 66, down from 70 in the first quarter. The NAHB said that all three components of the index were over 50, with the component measuring large remodeling projects ($50,000 or more) falling two points to 62, the component measuring moderate remodeling projects (at least $20,000 but less than $50,000) falling six points to 66, and the component measuring small-sized remodeling projects (under $20,000) falling six points to 70.
+ The Future Indicators Index averaged 51, down from 55 the prior quarter. The component that measures the rate at which leads and inquiries are coming in was unchanged at 51, and the component that measures the backlog of remodeling projects was 52, down from 58 in the prior quarter.
“Most remodelers continue to express positive sentiment, but some, especially in the western part of the country, are seeing a slowing of activity in their markets,” said NAHB Remodelers Chair Nicole Goolsby Morrison, a Raleigh, North Carolina, area-based remodeler. “Those who report a slowdown have cited economic uncertainty stemming from government policies as the main reason.”
NAHB chief economist Robert Dietz also said the results remain positive overall despite some market challenges.
“High interest rates and economic uncertainty are headwinds for remodeling, but not to the extent that they have been for single-family construction,” Dietz said. “Even with these headwinds, NAHB is projecting that remodeling will post solid gains in 2025, followed by more modest but still positive growth in 2026.”
According to a report issued by the Joint Center for Housing Studies at Harvard University earlier this spring, Americans spend more than $500 billion a year on residential renovation and repairs. It projects this will rise by 2.5%, this year, reaching a record $526 billion by Q1 2026.
Thus the NAHB survey appears to reflect some well-timed optimism in the market.
Carlos Martin, director of the Remodeling Futures Program at Harvard, added the following perspective:
“A slight downturn after the pandemic’s record expenditures gave way to modest gains in the sector this year,” Martin said. “Recent increases in the sales of existing homes are expected to drive slow but steady growth in home remodeling and repair.”
Added Chris Herbert, managing director at the center, “So far, high home values and other strong economic indicators have supported an uptick in homeowner improvement spending. However, economic volatility due to the uncertainty surrounding foreign tariffs and falling consumer confidence could well dampen this expected growth.”
Some of Harvard’s latest stats — somewhat dated as they track the $373 billion in spending in 2023 — show that kitchen and bath remodels are the most popular, adding up to 18.3% of total spending, compared with outside improvements, totaling 15.4% of total spending. By comparison, room additions and disaster repairs accounted for 5.9% each respectively.
Spending on the exterior of the home accounted for 20.1% of total expenditures, while systems and equipment accounted for 18.5% of total spending, compared with other interior projects at 10.1%.
This compares with data from 30 years ago that shows outside property renovations were the highest room additions and were the highest percentage of home improvement spending, at 20.1% of total expenditures; exterior replacements at outside property at 20%; outside property at 17.2%; kitchen and bath remodels at 12.7%; systems and equipment at 12.2%; interior projects at 7.4%; disaster repairs at 6%; and outside attachments at 4.4% of spending.
How this spending shapes up this year and next year remains to be seen. But as with any improvement project, whether it’s indoor or outdoor, we hope and expect there will be some money left over for spending on indoor or outdoor furniture. Without that, we believe, no home beautification/improvement project would ever be complete.
