An aging housing stock, record levels of home equity and favorable demographics will create positive growth prospects for the remodeling sector in 2025, according to industry experts at a panel hosted by the National Association of Home Builders (NAHB) during the International Builders’ Show in Las Vegas.
The outlook bodes well for the remodeling sector. Consumer inflation remains a concern as shelter costs continue to be sticky despite tightening measures by the Federal Reserve. And while lower mortgage rates are potentially on the horizon, the process will be bumpy, as long-term interest rates could remain flat or even increase with larger fiscal deficits. These ongoing housing affordability challenges signal that demand for remodeling projects will remain solid in 2025.
The NAHB/Westlake Royal Remodeling Market Index (RMI), a quarterly survey of NAHB remodeler members that provides insight for the remodeling industry, continues to exhibit positive sentiment, especially when compared to other housing sectors.
“Remodeler sentiment has remained in positive territory, well above the break-even point of 50, since the second quarter of 2020,” said NAHB Economist Eric Lynch. “One of the key factors for growth in the remodeling market is the aging housing stock, which continues to drive renovation projects. Homeowners are increasingly choosing to tap into their home equity and invest in improvements rather than relocate, creating long-term growth prospects for the industry.”
Lynch noted that while the industry has seen gradual improvements in the availability of labor and materials over the past few years, both remain ongoing challenges for remodelers.
“Although the remodeling industry faces certain headwinds, favorable demographics and characteristics of the current housing stock will boost remodeling activity in 2025,” said Lynch. “NAHB is forecasting residential remodeling activity to post a 5 percent gain in 2025, and a nominal gain of 3 percent in 2026,” said Lynch.