Home Improvement Spending in 2025

The home improvement market continues to show resilience despite recent cooling after the spike in spending during the Covid-19 pandemic.

In fact, both the number of homeowners spending on home improvement and the amount spent remain higher than pre-pandemic levels.

According to a recent Harvard Joint Center for Housing Studies report, the market is projected to reach $608 billion in 2025, representing a 50% increase from pre-pandemic levels.

Which Consumers are Taking on Home Projects?

Nearly 1 in 3 homeowners (30%) undertook at least one home improvement project in 2023, with the average spending reaching approximately $15,700 for the year.

Homeowners who live in their home are the most likely to invest in home improvements.

The total home improvement market for owner-occupied homes reached $405 billion in 2023 - more than 80% of the total market. Among homeowners there has also continues to be a shift toward professional installation projects, with 85% of projects involving hiring a professional.

Generally, professionally installed projects include larger, more specialized improvements like roofing, electrical, HVACs, and are more typically expensive project than DIY improvements.

Additional demographics such as age and amount of time in the home can also give an indication of likelihood and type of home improvement spending.

The majority of projects were completed by homeowners who are 45 or older (72%), although amount spent ranges. Homeowners over 65 completed the most number of projects, but Gen X and Millennials spent the most on home improvement, averaging approximately $17,500 and $16,800 respectively. Older homeowners are also more likely to live in older homes and have lived there for a longer time. Both of these factor into home improvement decisions, particularly reflected in the percentage of budget that goes toward replacing old equipment/functionality - 54% for over 65 versus 47% for under 65.

New Indicators of Home Improvement Activity

Historically, home sales served as a reliable indicator for renovation activity, with recent homebuyers outspending non-movers by 51% ($6,600 vs. $4,300 annually) and home sellers preparing properties for the market. But with homeowner mobility dropping to just 5.5% in 2023 amid rising interest rates and limited inventory, new indicators to identify potential renovation customers have emerged.

Aging Housing Stock Drives Demand

The median age of American homes has reached 44 years in 2023, creating substantial renovation needs:

Half of all improvement spending (49%) now goes toward necessary replacements of core home components
Owners of homes built before 1940 spend 50% more on improvements and repairs ($6,750) than those in homes built after 2010 ($4,500)

Energy-Related Projects Reduce Utility Spend

With homes built before 1980 consuming 30% more energy per square foot than newer homes,

energy efficiency projects represent a significant opportunity:

1 in 6 homeowners (17%) completed at least one energy efficiency project in 2022-2023
Energy-related project spend was $140 billion across the US in 2023
3.4 million tax returns claimed energy-related tax credits in 2023 alone

Homegrown:

Your Home Improvement Lending Growth Engine

Credit unions and community lenders looking for analytics and innovative member tools can leverage Homegrown’s solutions to

Identify the members most likely to benefit from home improvements like new windows and HVAC upgrades
Tailor marketing outreach with customized messaging and information based on your member segments
Align members with the best financial product from your offering based on project type and expected cash flow impact (savings, rebates, tax credits)
Streamline member decision-making with personalized recommendations and information on project types, costs/savings, and available rebates or tax credits

Sources: This article includes information sourced from The Joint Center for Housing Studies report 'Improving America's Housing 2025', U.S. Energy Information Administration (EIA), and US Census.