For homeowners struggling with high energy bills, a new HVAC system, better insulation, or replacement windows could make a significant difference. But there's a catch: The homeowners most in need of improvements often can't afford them, according to The Retrofit Gap: Disparities in Homeowner Energy Insecurity and Energy-Related Remodeling, a new report from Harvard University’s Joint Center for Housing Studies.

Researchers found that energy insecurity is disproportionately concentrated among lower-income homeowners, people of color, and those living in older homes. For remodelers, the findings highlight both a market need for energy-related improvements and financial barriers that prevent many homeowners from making them.

Millions of Homeowners Face Energy Insecurity

Twenty-three million homeowners experience energy insecurity, and that means more than a struggle to pay utility bills.

The study's analysis of 2024 Residential Energy Consumption Survey data showed that 25.7% of homeowners experienced at least one of four energy-related hardships: 1) cutting back on necessities (food, medicine), 2) keeping the home at an unhealthy temperature (hot or cold) due to energy costs, 3) receiving a notice of utilities disconnection, or 4) an inability to use heating or air conditioning due to broken equipment or utility disconnection.

More than half (52.2%) of homeowners earning less than $30,000 annually experienced energy insecurity, compared with 10.4% of those earning $150,000 or more.

A home's age and condition also are important factors. Those living in houses built before 1960 were more likely to experience energy insecurity than those in homes built since 2000 (28.9% vs. 20.8%). Older homes were also more than twice as likely to have structural deficiencies (22.1% vs. 10.1%), single-pane windows (34.5% vs. 16.3%), and inadequate or no insulation (28.9% vs. 10.2%). 

And the consequences extend beyond discomfort. Nearly 40% of homeowners in this income group reduced or went without food or medicine to pay energy bills.

The Home Improvement Investment Gap

The research reveals a disconnect between the homeowners who experience the greatest energy challenges and those who invest in improvements to address them.

In 2023, approximately 16.9 million homeowners (19.5% of owner-occupied households) completed at least one energy-related home improvement. Collectively, they spent $139.1 billion.

But that spending was heavily concentrated among higher-income households.

Homeowners earning $150,000 or more accounted for 39.5% of all energy-related remodeling expenditures, despite representing just 9.9% of energy-insecure homeowners.

Meanwhile, homeowners earning less than $30,000 accounted for just 8.9% of energy-related remodeling spending, even though they represented 25.6% of energy-insecure homeowners.

Higher-income homeowners were also more likely to undertake improvements. About 21.9% of homeowners earning $150,000 or more completed energy-related work, compared with 15.4% of those earning less than $30,000.

And when lower-income homeowners did invest, they spent considerably less. Those earning less than $30,000 averaged approximately $6,150 on energy-related improvements, compared with $11,160 among homeowners earning $150,000 or more.

Roofing and HVAC Lead the Spending

Roofing and HVAC accounted for nearly two-thirds of the $139.1 billion in total spending, with an average investment of $11,040 per homeowner undertaking the work.

Roofing generated $45.8 billion in expenditures, with an average investment of $11,040 per project. HVAC improvements accounted for another $40.4 billion, averaging $8,400 per project.

Windows and doors represented $22.1 billion, followed by siding ($9.4 billion), electrical improvements ($9 billion), water heaters ($5.9 billion), and insulation ($3.5 billion).

Cost is the Biggest Obstacle

The disparity isn't necessarily a result of homeowners neglecting needed improvements, but rather an economic reality where they have to prioritize immediate repairs over longer-term investments.

For homeowners earning less than $30,000, energy-related improvements consumed an average of 6.3% of their household income. For those earning $150,000 or more, the figure was just 0.8%.

That financial pressure can mean addressing an urgent roof leak or replacing a failed HVAC system without having enough money left for insulation, air sealing, or other improvements that could deliver longer-term savings.

The study also found disparities among homeowners of different racial and ethnic backgrounds. Black and Hispanic homeowners generally spent less on energy-related improvements than white homeowners, even when comparing households at similar income levels.

The researchers argue that closing the retrofit gap will require more than encouraging homeowners to make energy-efficient upgrades. Financial assistance, access to financing, and help navigating improvement programs will also be necessary.

For the remodeling industry, the findings underscore a substantial unmet need. Millions of homeowners are living with inefficient or deteriorating housing conditions, but the ability to turn that need into a remodeling project remains heavily dependent on household finances.