Las Vegas—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 (IBS), held here.
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. Home owners are increasingly choosing to tap into their home equity and invest in improvements rather than relocate, creating long-term growth prospects for the industry.”
The RMI survey also showed that 98% of remodelers cited that most or some of their consumers are familiar with the aging-in-place concept. That share was 75% in the fourth quarter of 2004, indicating a significant increase in awareness among consumers over the last two decades and thus creating additional opportunities for growth in the market.
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. According to RMI survey results, the top five fields that remodelers reported labor shortages in include: carpenters-finished, carpenters-rough, framing crews, bricklayers/masons and concrete workers.
Remodelers report the products most difficult to get are appliances, windows and doors, HVAC equipment, plumbing fixtures and fittings and cabinets.
“Although the remodeling industry faces certain headwinds, favorable demographics and characteristics of the current housing stock will boost remodeling activity in 2025,” Lynch said. “NAHB is forecasting residential remodeling activity to post a 5% gain in 2025, and a nominal gain of 3% in 2026.”
Attendees also heard from Alan Hanbury, Jr., CGR, CAPS, GMR, president of House of Hanbury Builders Inc., based in Newington, Conn., who presented on best practices for remodelers to grow and manage their businesses profitably.
For remodelers, a few best practices stand out in ensuring sustained success. “Many business owners overlook budgeting, yet establishing a clear financial strategy is crucial for controlled growth,” Hanbury said. “By tracking expenses and forecasting needs, business owners can maintain healthy financial practices and avoid unnecessary strain.”
Hanbury noted that focusing on the quality of work over discounting will also be a better driver of leads, growth and revenue for those in the remodeling industry.
Remodelers who consistently track the true billable hourly cost of employees will gain invaluable insights into their operation’ profits. “Without monitoring it, you’ll never understand the true cost of your workforce,” Hanbury noted. “It’s also very important to have financial targets, which allow you to benchmark against your competitors as well as your past efforts and know where your business stands in the marketplace.”