Business Environment Profiles - United States
Published: 21 July 2025
Private spending on home improvements
280 $ billion
0.8 %
This driver measures private spending on home improvements, upgrades and repairs. This type of spending is a component of the value of residential construction, more formally known as private investment in residential structures. The data for this driver is sourced from the Bureau of Economic Analysis and is presented in chained 2017 dollars.
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Private spending on home improvements is estimated to reach $280.0 billion in 2025, representing continued resilience in the market despite broader economic headwinds. Recent trends have reflected a shift in consumer focus, as elevated interest rates have discouraged home sales and instead motivated homeowners to invest in upgrades to existing properties. Demand has centered on maintenance, repairs, and professional renovations, driven by an aging housing stock and a desire for higher-quality, more complex improvements. The continued popularity of energy-efficient and smart home upgrades also indicates a growing emphasis on modernization and sustainability.
From 2020 to 2025, private spending on home improvements demonstrated considerable fluctuation before resuming growth. Spending rose slightly by 0.7% in 2021, then dropped 5.9% to $254.7 billion in 2022, mirroring post-pandemic normalization as households shifted away from lifestyle-driven projects. This dip reflected the waning impact of pandemic-era renovation surges, as discretionary spending redirected toward other goods and services. Spending remained largely subdued, declining marginally by 0.2% in 2023. The market rebounded in 2024, with spending increasing by 8.8% to $276.7 billion, partially due to pent-up demand and renewed consumer willingness to invest in home improvements. Rising home values and the need for maintenance of aging homes also contributed to this recovery.
Throughout this period, trends such as fluctuating interest rates and housing market dynamics significantly influenced behavior. High interest rates discouraged home purchases, prompting homeowners to upgrade their current residences rather than move. Increased access to home equity financing supported larger renovation projects, especially those aimed at improving long-term sustainability and comfort. The industry also observed a preference shift from DIY to professional renovations, reflecting both the complexity of desired projects and consumers' focus on quality results. Cultural emphasis on well-being and functionality, alongside environmental concerns, cemented energy-efficient upgrades and smart technologies as key spending drivers.
Overall, between 2020 and 2025, the home improvement market navigated a volatile landscape marked by post-pandemic normalization and economic uncertainty, eventually returning to growth. The interplay of interest rates, housing market trends, and evolving homeowner preferences ensured demand for both essential maintenance and ambitious, quality-focused upgrades, demonstrating the industry's adaptability and sustained relevance as households sought to improve the value and comfort of their living spaces
Private spending on home improvements is projected to grow 1.6% to $284.6 billion in 2026. A stab...
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