The home improvement industry is experiencing unprecedented growth, driven by several key factors that have transformed it into a multi-billion-dollar sector. In this article, we explore the reasons behind this growth and what the future holds for this thriving industry.
How big is the entire home improvement industry?
The home improvement industry is massive, with estimates indicating it exceeded $400 billion in annual spending in 2023. According to Harvard’s Joint Center for Housing Studies, homeowners spent $450 billion on home improvements and repairs last year. This figure includes expenditures on both occupied and unoccupied homes, reflecting the robust health of the market.
How does the home improvement industry compare with other retail sectors?
While the home improvement industry is smaller than economic giants like automobiles and supermarkets, it still ranks among the top sectors:
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38% larger than full-service restaurants
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154% larger than department stores
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20% larger than health and drug care stores
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55% larger than clothing and accessories stores
Why is the home improvement industry growing so fast?
Home improvement spending is rising at nearly 6% annually, driven by several factors:
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Homeowner Equity: The addition of homeowner equity over the past few years has empowered homeowners to undertake major renovations and upgrades.
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Discretionary Projects: Homeowners are now more willing to invest in lifestyle-enhancing projects, not just necessary maintenance. For instance, the average spending on home improvement projects increased year after year.
Home renovation in progress, highlighting the surge in remodeling projects.
Which categories are growing the fastest?
The following home improvement projects have seen significant growth:
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Bathroom remodeling
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Home’s exterior painting
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A/C Central Installation
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Addition building
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Deck or porch building
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Concrete patios, walks, and steps building
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Drywall installation
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Asphalt paving installation
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Garage building
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Basement remodeling
How are generational shifts impacting home improvement spending?
Baby Boomers currently drive the majority of home improvement spending. However, Millennials are increasingly becoming homeowners and investing in fixer-uppers. Research shows that nearly half of homeowners under age 35 have household incomes of at least $90,000, providing them with the means to personalize their spaces.
What can we expect from the home improvement industry in the near future?
The industry is expected to continue its upward trajectory. Higher mortgage rates may encourage homeowners to improve their current homes instead of moving. We can also anticipate more discretionary projects and whole-room renovations, driven by both Millennials and Boomers.
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