After two years of decline, annual expenditures for improvements and maintenance to owner-occupied homes are expected to grow at a mild pace throughout 2025, according to the latest Leading Indicator of Remodeling Activity (LIRA). The LIRA projects that year-over-year spending for home renovation and repair will increase by 1.2 percent in 2025.
A solid labor market, rising home values, and continued improvement in existing home sales are supporting greater activity in home remodeling and repair. Upward trending retail sales of building materials and steady permitting for remodeling indicate that homeowners are slowly but surely expanding the pace and scope of projects compared to the last couple years.
This LIRA release incorporates new benchmark data from the American Housing Survey that revises up the overall market size. In the wake of the pandemic, strong gains in homeownership, record high home values and equity, and a healthy economy combined to lift improvement and repair spending to unprecedented heights in 2022 and 2023, growing 25.3 percent over these two years. The growth in actual spending was 7.5 percentage points higher than the gains originally estimated by the LIRA models over this period. While expenditures are expected to grow only modestly this year, we’ve increased our projection for the remodeling market size in 2025 by $30 billion, or 6.4 percent, to $509 billion.
