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United States Home Improvement Market By Project (DIY, DIFM); By End-use (Kitchen Improvements and Additions, Bath Improvements and Additions, System Upgrades, Exterior Replacements, Interior Replacements, Property Improvements, Disaster Repairs, Other Room Additions and Alterations) – Growth, Share, Opportunities & Competitive Analysis, 2024 – 2032

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Market Overview

The United States home improvement market was valued at USD 470 billion in 2023 and is expected to grow at a CAGR of 5.2% through 2032. This growth reflects the industry’s dynamic nature, encompassing a wide range of products and services aimed at enhancing residential properties.

The United States home improvement market has witnessed a remarkable surge in recent years, emerging as a pivotal sector within the broader economy. This growth trajectory is underpinned by a confluence of factors, including evolving homeowner preferences, an aging housing stock, and a robust real estate market that encourages renovations and upgrades. The market is valued at several hundred billion dollars, with projections indicating sustained growth. This expansion is fueled by both discretionary and necessary improvements, ranging from kitchen and bathroom remodels to energy-efficient upgrades and home automation systems.

The market’s dynamism is reflected in the increasing homeowner expenditures on home improvement projects, driven by a desire to enhance living spaces and increase property values. Moreover, the COVID-19 pandemic has accelerated this trend as more Americans spend time at home, prompting a reevaluation of their living spaces. The DIY (do-it-yourself) segment, in particular, has seen significant growth alongside professional services, indicating a diverse consumer base with varied needs and preferences.

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Key market drivers

The US home improvement market is on a trajectory of sustained growth, influenced by a confluence of demographic shifts, economic factors, lifestyle trends, technological innovations, government policies, and changes in the competitive landscape. These elements collectively shape homeowner preferences and spending behaviors, underpinning the market’s expansion.

Demographics and Economic Factors

A significant driver of market growth is the changing demographics, with Millennial and Gen Z populations entering their peak homeownership years, driving a surge in demand for home renovations and upgrades. This shift is complemented by an increased focus on homeownership over renting, leading individuals to invest more in their properties. The aging baby boomer population is also contributing to market dynamics as they choose to age in place, necessitating home modifications for better accessibility and comfort.

Economically, the market is buoyed by rising home prices, which incentivize homeowners to invest in their properties to further enhance value. Low interest rates and strong disposable income levels make financing home improvement projects more accessible and affordable, encouraging spending in this sector.

Lifestyle Trends and Technology

Lifestyle changes are profoundly impacting home improvement trends. The rise in home entertainment, remote work, and sustainability concerns is pushing homeowners towards renovations that support outdoor living, home offices, and energy efficiency. Technology plays a pivotal role here, with the increased adoption of smart home solutions and virtual reality tools facilitating these lifestyle-driven renovations. Innovations in building materials and construction techniques offer homeowners enhanced durability, efficiency, and design possibilities, further driving market growth.

Government Incentives and the Competitive Landscape

Government policies, including tax credits for energy-efficient renovations and infrastructure spending, also stimulate market growth by making certain home improvements more attractive financially. The competitive landscape is evolving with the rise of online retailers and specialized services, providing consumers with more options and convenience for their home improvement needs. This environment encourages innovation and competitive pricing, benefiting consumers.

Evolving Homeowner Preferences:

The first major driver of the US home improvement market is the shift in homeowner preferences towards more sustainable, technology-driven, and personalized living spaces. This shift is partly influenced by demographic changes, including the aging baby boomer generation, which is investing in renovations to age in place, and millennials, who prioritize sustainability and smart home technology. These evolving preferences are driving demand for home improvement projects that not only enhance aesthetic appeal but also improve functionality and energy efficiency.

Real Estate Market Dynamics:

The second driver is the dynamics of the US real estate market. In many regions, the scarcity of affordable housing options has made renovation a more attractive proposition than purchasing a new home. Additionally, the desire to increase property value and appeal in a competitive real estate market motivates homeowners to invest in upgrades and renovations. This trend is particularly pronounced in urban and suburban areas, where home improvements can significantly impact property values.

Key market restraints

Despite the optimistic growth factors fueling the US home improvement market, several key challenges could curtail its full potential. These constraints range from economic and labor-related issues to regulatory, financial, and environmental concerns, each presenting unique hurdles to homeowners and industry professionals alike.

Rising material and labor costs

The home improvement sector is grappling with significant increases in the costs of building materials, equipment, and skilled labor. Such cost escalations can deter homeowners from embarking on extensive projects or necessitate scaling down their ambitions. Additionally, supply chain disruptions and global economic fluctuations contribute to price volatility, potentially causing delays and further inflating project costs.

Skilled labor shortage

A critical shortage of skilled labor in the construction industry poses significant challenges, affecting project timelines and driving up labor costs. This scarcity is particularly burdensome for smaller contractors and those undertaking DIY projects. Addressing this issue through competitive wages, enhanced training programs, and improved working conditions is vital for the sector’s sustainability.

Regulatory Hurdles and Permitting Delays

Home improvement projects often encounter complex and lengthy permitting processes that can delay or disrupt project timelines. These regulatory hurdles frustrate both homeowners and contractors, inflating costs and complicating project planning. Simplifying these processes and enhancing permit approval efficiency could encourage more homeowners to proceed with their renovation plans.

Access to Financing

The availability of cash or affordable financing options is not universal among homeowners, limiting their capacity to pursue significant renovations or necessary home upgrades. Introducing innovative financing solutions with favorable terms and flexible payment options could broaden access to funds, stimulating market activity.

Climate change and extreme weather events

The increasing frequency of extreme weather events, such as floods and wildfires, necessitates costly repairs and preventative measures, straining homeowners’ budgets and limiting their ability to fund additional improvements. Adaptation strategies and government assistance programs may offer some relief, enabling homeowners to undertake resilient home improvements.

Limited consumer confidence and economic uncertainty

Economic downturns and periods of inflation can erode consumer confidence, leading to reduced spending on discretionary items, including home improvements. This can result in market volatility and slow growth. Fostering trust through transparent pricing and emphasizing the value of essential renovations may help sustain homeowner investment during uncertain economic times.

Environmental Concerns and Sustainability

The environmental impact of home improvement projects, including significant contributions to greenhouse gas emissions and resource depletion, is an increasing concern. Consumers are becoming more mindful of sustainability, driving demand for eco-friendly materials, energy-efficient upgrades, and sustainable building practices. Embracing these preferences is crucial for maintaining market competitiveness and addressing environmental challenges.

Market Opportunities

  1. Integration of Smart Home Technology: As technology advances, there is a growing opportunity to integrate smart home devices and systems into home improvement projects. This includes smart appliances, security systems, and energy management tools that enhance convenience, safety, and efficiency.
  2. Sustainability and Energy Efficiency: There is increasing demand for home improvements that reduce environmental impact and lower energy costs. Solar panel installations, high-efficiency HVAC systems, and eco-friendly building materials represent significant market opportunities.
  3. Aging in Place: With an aging population, there is a rising need for renovations that make homes more accessible for older adults. This includes projects like bathroom remodels with walk-in tubs and the addition of ramps and lifts.
  4. Outdoor Living Spaces: The pandemic has highlighted the value of outdoor living spaces. Expanding or enhancing areas such as decks, patios, and gardens can meet the growing demand for comfortable and functional outdoor areas.
  5. Home Office Renovations: The shift towards remote work has created a need for dedicated home office spaces. Converting existing rooms or adding new spaces can cater to this demand.
  6. Health and Wellness Features: Incorporating health and wellness features, such as air purification systems and home gyms, can tap into the growing consumer focus on health and well-being.
  7. E-Commerce and Digital Platforms: The rise of e-commerce and digital platforms offers a new avenue for home improvement retailers and service providers to reach consumers, providing convenience and expanded choices.

Interesting Facts About the Market

  1. The market is divided between DIY projects undertaken by homeowners and projects that require professional services, with a notable increase in DIY activities during the pandemic.
  2. The home improvement market has shown resilience in the face of economic downturns as homeowners opt to renovate existing properties rather than purchase new ones.
  3. Platforms like Pinterest and Instagram have become significant influencers in home design trends, driving demand for specific home improvement projects.
  4. Major home improvement retailers, such as Home Depot and Lowe’s, have reported record sales, highlighting the market’s strength.
  5. Outdoor living space projects have surged in popularity, reflecting a desire for more functional and aesthetically pleasing outdoor areas.
  6. There is a growing consumer preference for sustainable and eco-friendly building materials, reflecting broader environmental concerns.
  7. Rising home prices have increased homeowners’ equity, providing them with the financial means to undertake substantial renovation projects.
  8. Advancements in home improvement technologies, including augmented reality (AR) for project visualization and online project management tools, are enhancing project planning and execution.
  9. Home improvement trends and spending vary significantly by region, influenced by factors such as climate, local real estate markets, and cultural preferences.
  10. The COVID-19 pandemic has not only accelerated home improvement spending but also shifted priorities towards creating more comfortable and multifunctional living spaces.

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Leading Players

The US home improvement market is characterized by a mix of large national chains and local businesses, including

  • The Home Depot
  • Ferguson Enterprises
  • Andersen Corporation
  • DuPont de Nemours
  • Kingfisher
  • Power Home Remodeling Group
  • American Exteriors
  • Lutron Electronics
  • Dreamstyle Remodeling
  • Sherwin-Williams Company
  • Steves and Sons Roxul
  • Builders FirstSource
  • Masco Corporation
  • Keller Supply Company
  • Case Design/Remodeling
  • Robert Bowden
  • APCO Industries
  • Boral Building Products
  • Harvey Building Products
  • State-wide Remodeling
  • Watsco, Inc.
  • Beacon Roofing Supply
  • Pella Corporation
  • Kohler
  • ABC Supply Co.
  • Neil Kelly Company
  • Henkel Corporation
  • Owens Construction
  • M.S. International

These leading players dominate the market through extensive product offerings, comprehensive services, and a strong focus on customer satisfaction and innovation.

Competitive Landscape

The competitive landscape in the US home improvement market is highly fragmented, with a vast number of players ranging from large national retailers and service providers to small, local businesses. Competition is fierce, with companies vying for market share through pricing strategies, quality of service, product range, and innovation. Strategic partnerships and acquisitions are also common as companies look to expand their capabilities and market reach.

Recent Developments and Acquisitions:

  • In August 2022, Setle, an innovative startup based in Belgium, successfully secured funding of approximately $15 million, with the investment round led by KBC, a notable Belgian banking and insurance entity. This financial infusion is earmarked for enhancing Setle’s groundbreaking solution that instantaneously provides realistic estimates for sustainable renovation projects, targeting real estate professionals and prospective property purchasers.
  • In March 2022, Weaver, a pioneering startup headquartered in London and founded in 2017, concluded its seed investment round, raising $4 million. The funding round was led by btov Partners, a distinguished European venture capital firm. Weaver’s proprietary Software as a Service (SaaS) platform is ingeniously designed to facilitate the renovation process, offering a seamless contract negotiation interface for homeowners and contractors alike.
  • Block Renovation, established in 2017, announced in November 2021 that it had raised $50 million in a Series C funding round. The startup plans to utilize this capital to expand its innovative platform across the United States. Block Renovation’s platform revolutionizes the renovation industry by digitizing and automating the process, thereby significantly enhancing the customer experience.
  • Furthermore, in February 2022, Lowe’s Companies Inc., a leading American corporation specializing in home improvement, announced a strategic partnership with Instacart, an online grocery delivery platform. This collaboration aims to offer same-day delivery services for Lowe’s extensive range of home improvement products across the North American region, demonstrating Lowe’s commitment to integrating convenience with superior customer service in the home improvement sector.

Regional Analysis

Geographic trends emerge in various areas. The South Atlantic captures the largest regional share at 21%, led by Florida, Georgia, and Virginia. Strong population growth here, high ownership levels, and humid sub-tropical climates accelerating replacement needs all spur home improvement activity. The Midwest follows closely behind at 20% share, supported by an aging housing stock and harsh winters causing damage in key states like Illinois, Ohio, and Michigan.

Western states also drive significant demand, especially recently as housing prices reached new highs. The Pacific region holds a 17% share currently, thanks to surging home values and encouraging investments in states such as California, Washington, and Oregon. Additionally, natural disasters here often necessitate repair projects, while the tech boom funnels discretionary incomes into home upgrades. High tornado frequency fuels projects across South Central states like Texas, Tennessee, and North Carolina to capture 16% of the market.

The Northeast and more rural Northwest/Mountain states contribute a bit less market share at 14% and 12%, respectively, but still demonstrate steady home improvement activity and spending driven by large population hubs with old infrastructure in need of replacement and strong DIY attitudes, respectively. Ultimately, the market remains highly fragmented, with big-box retailers competing fiercely against smaller specialty providers to cater to localized consumer preferences.

Segmentations:

By Project

  • DIY
  • DIFM

By End-use

  • Kitchen Improvements and Additions
  • Bath Improvements and Additions
  • System Upgrades
  • Exterior Replacements
  • Interior Replacements
  • Property Improvements
  • Disaster Repairs
  • Other Room Additions and Alterations

Future Outlook

  1. The US home improvement market is expected to continue its growth trajectory, driven by ongoing trends in home personalization, sustainability, and technology integration.
  2. Advancements in technology will play a pivotal role in shaping the future of the market, with increased use of digital tools and smart home technologies.
  3. Eco-friendly and energy-efficient renovations will gain further momentum, reflecting growing environmental awareness among homeowners.
  4. Changing lifestyles, remote work trends, and demographic shifts will continue to influence home improvement priorities and spending.
  5. Companies will expand their service offerings to include comprehensive home improvement solutions, from design to execution.
  6. Demand for personalized and custom home improvement projects will rise, catering to individual homeowner preferences and needs.
  7. Financing solutions for home improvement projects will become more accessible, supporting market growth.
  8. Changes in building codes and regulations, particularly those related to energy efficiency and sustainability, will influence home improvement trends.
  9. The market will adapt to global supply chain challenges, potentially leading to increased domestic production of home improvement materials.
  10. E-commerce and mobile platforms will become increasingly important in the home improvement market, offering convenience and expanded choices for consumers.

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