Aging market drives outlook for home renovation spending

Aging housing, disaster resilience and senior citizens choosing to stay in place are behind a solid outlook for home renovation and remodeling spending, despite a recent falloff from pandemic-era highs. 

Consumer spending on home improvement and maintenance, including rental investment properties, leaped by 49% over five years to an estimated $603 billion at the end of 2024, according to a report authored by Harvard researchers. While totals for the last two years edged downward from 2022's record $611 billion, the numbers show a high level of interest remains to upgrade existing properties. 

For 2025, Harvard predicts spending to creep back upward from last year to approximately $608 billion. The dynamics of today's housing market should sustain activity near that level for the near future. 

"Given the strong foundation and growing needs, residential remodeling is expected to remain a formidable economic sector in the years ahead," said Chris Herbert, managing director of Harvard's Joint Center for Housing Studies.

"And despite unparalleled spending in the last few years, far more investment is needed to improve energy efficiency, disaster resilience and accessibility for the nation's 145 million homes," Herbert continued in the center's 2025 Improving America's Housing report.  

In 2023, replacement projects for features such as roofing, windows and air conditioning systems made up 49% of home improvement spending. On average, homeowners spent close to $4,700 on improvements that year. 

Homeowners most often turned to savings to finance renovation, but for projects such as room additions, 25% said they tapped into their accrued equity. For remodels of kitchen, bathrooms or features attached to the property, 15% turned to home equity.

At the same time, 18% used funds from homeowners insurance settlements to replace damaged roofing, windows and siding. Following disasters, 68% were able to use insurance proceeds for repairs.  

A sizable chunk of the outlay came from baby boomers, who doubled their share of expenditures over two decades. In 2023, spending from households headed by someone 65 or older hit $110 billion to make up 27.2% of the total market. Their share outpaced all other age groups, with the 55-to-64 bracket market making up 23.7% and the 45-to-54 year-old segment 20.1%. Households headed by 35-to-44 year-olds accounted for 20.7% of spending, while the remainder of millennial and Gen Z homeowners 34 and younger contributed 8.3% of volume.  

The rise in senior spending corresponds to an increase in homeownership among older generations over the last 10 years, necessitating accessibility upgrades in some cases. The average amount spent by those 65 and over increased to $3,800 in 2023 from $2,800 ten years earlier. The 2023 average, though, came in behind all other age groups, with homeowners 35 to 44 averaging the most at $5,700 annually.

Homeowners are also living in housing stock that is the "oldest it has ever been," as building innovation prolongs their properties' longevity, Harvard said. A lapse in new-home construction of several years also pushed up the median age of U.S. housing as builders slowed their activity after the Great Financial Crisis.  

In 2023, the median age of owner-occupied homes was 42 years, up from 37 years in 2013 and 31 years in 2003, with replacement of components turning into a necessity over time.

Mortgage rates falling to record lows earlier this decade also led to a refinance boom and the current lock-in effect that is proving to disincentivize homeowners to sell existing homes and take on higher housing costs. 

"There is both a market opportunity and a moral imperative to expand improvement and repair services for these homeowners," said Sophia Wedeen, senior research analyst at the center.

Still, despite the importance of home maintenance, 20% of homeowners did not make any spending for improvements or repairs in 2023, and 15% reported investing under $500 for the full year. 

The top maintenance priorities for owners of older units also include efforts to protect against extreme weather, which is contributing to higher insurance costs. "While few homeowners undertake mitigation retrofits, skyrocketing insurance premiums may provide the motivation to do so," the report said. 

Between 2003 and 2023, expenditures for needed repairs resulting from hurricanes, wildfires or flooding more than tripled to $49 billion from $16 billion. At the same time, homeowners also spent $139 billion to improve home energy efficiency, nearly four times the amount in 2003.

High costs preclude many from making disaster-mitigation or energy investments, though, Among the homeowners budgeting for such projects, expenditures averaged $19,300. 

While consumer trends point to increased remodel spending, the threat of rapidly rising supply prices may discourage some activity, the report said. A majority of businesses in the segment also point to a dearth of skilled professionals to perform the work needed. New immigration policies may exacerbate the shortage, with 34% of the construction labor force made up of foreign workers.