The remodeling market is expected to see growth 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. Factors such as an aging housing stock, record levels of home equity, and favorable demographics are anticipated to contribute positively to the sector.
Despite concerns over consumer inflation and sticky shelter costs, which persist despite Federal Reserve measures, demand for remodeling projects is predicted to remain strong. While lower mortgage rates may be on the horizon, long-term interest rates could stay flat or rise due to larger fiscal deficits.
The NAHB/Westlake Royal Remodeling Market Index (RMI), a quarterly survey providing insights into the remodeling industry, shows positive sentiment 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. He attributes growth in part to homeowners opting for renovations over relocation.
The RMI survey indicates that awareness of aging-in-place concepts among consumers has increased significantly from 75% in 2004 to 98% today. This shift presents further opportunities for market expansion.
However, challenges persist with labor and material availability. The top fields experiencing labor shortages include carpenters-finished and rough, framing crews, bricklayers/masons, and concrete workers. Products like appliances and HVAC equipment are also difficult for remodelers to procure.
Lynch forecasts a residential remodeling activity gain of 5% in 2025 and a nominal gain of 3% in 2026 despite these headwinds. "Although the remodeling industry faces certain headwinds, favorable demographics and characteristics of the current housing stock will boost remodeling activity in 2025," he stated.
Alan Hanbury Jr., president of House of Hanbury Builders Inc., shared best practices for profitable business management at the event. He emphasized budgeting as crucial for controlled growth: “Many business owners overlook budgeting.” Tracking expenses helps maintain healthy financial practices.
Hanbury also advised prioritizing quality over discounts as a better driver for leads and revenue. Monitoring true billable hourly costs provides insights into profitability: “Without monitoring it, you’ll never understand the true cost of your workforce.”
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