Remodeling Industry Remains a Bright Spot

The remodeling sector once again remained a bright spot in the residential construction industry, even as new home builders face a range of challenges and 2025 largely disappointed in terms of single-family housing starts.

Since the pandemic, the number of remodeling firms and their employees has risen nationwide. In fact, remodeling firms accounted for more than half of all residential construction firms in 2024, an increase of nearly 20% since the mid-2000s. What’s driving this growth and is it expected to continue?

'Locked-in effect' and Aging Housing Stock

We’re experiencing a “locked-in effect,” largely a result of the pandemic, where most homeowners have an interest rate well below today’s average that they would lose if they moved. Currently, more than 80% of outstanding mortgages have interest rates below 6%, according to an NAHB analysis of Federal Housing Finance Agency data. The households with those mortgages have no financial reason to move so instead they hire remodelers to improve their homes.  

This trend is coupled with an aging housing stock that needs repairs. Homes built before 1970 account for 35% of today’s housing stock, while homes built since 2020 make up only 3%. And homes need help as they age, so remodelers are being hired to update kitchens and bathrooms, install new roofs and windows, replace HVAC systems, and make other improvements to give owners their dream home while allowing them to keep their favorable mortgage rate.

Increased Home Equity and an Older Population

Home prices nationwide have surged about 55% since 2020, providing owners with substantial equity to fund remodeling projects. Home equity loans and home equity lines of credit allow owners to use their real estate as collateral for bigger interior projects and large additions.

Additionally, the nation’s population continues to age. The share of Americans over age 65 has risen from 12.4% in 2004 to 18% in 2024 and spurred a need for aging-in-place home modifications. As people live longer, they’re finding that their homes often don’t meet their current or future long-term needs. Homeowners are hiring remodelers to modify bathrooms, add a first-floor bedroom, and make other accessible upgrades.

Future Outlook

Looking ahead, an aging housing stock and an older population are long-term realities that will continue to push remodeling demand for the rest of this decade. These are good times for remodelers, and this isn’t going to change any time soon.