The remodeling industry has several factors boosting its pace at the moment. According to Robert Dietz, chief economist at National Association of Home Builders (NAHB), the forecast shows 5% growth in 2025 and 3% in 2026.
“One of the key factors for growth in the remodeling market is the aging housing stock, which continues to drive renovation projects,” said NAHB Economist Eric Lynch in a press release. “Homeowners are increasingly choosing to tap into their home equity and invest in improvements rather than relocate, creating long-term growth prospects for the industry.”
Lynch also shared that there has been a small improvement in labor and material availability over the past few years, but both are still creating unique challenges for remodelers and homeowners.
The Home Improvement Research Institute’s January 2025 Quarterly Contractor Business Sentiment Tracker also shows that top concerns for remodelers moving forward over the next year are material costs and the economy, with labor and product availability showing up next on the list of concerns.
“Homeowners are stuck in a house,” said Angie Hicks, founder of the home improvement website Angi. “Interest rates went up and inventory went down, and now they feel stuck – two-thirds said they are going to renovate instead of relocate.”
Feeling stuck and deciding to renovate means a homeowner needs to find the right contractor and execute the project together, or start the “dating” process.
Intangibles of Remodeling
While product and labor availability must be in the right place, at the right time, so do the intangibles, which may be the more difficult part of the equation–the start of the relationship between the homeowner and the contractor.
The contractor has to find the homeowners that they want to do business with and vice versa. Then, they need to provide the homeowner a clear path that shows the budgeting, an overview of the process, what the different products are, and other details that lead to a comfortable and trusting relationship.
“Pros tell us that 75% of business comes from repeat business,” said Marine Sargsyan, staff economist at home improvement site Houzz. “They know the work and it’s such a vulnerable piece, so they have to make sure to manage the relationship. At the end of the day, it is a relationship.”
The cost and the timeline of a project also add stress. The planning portion alone can take six months, and then the construction can add on another two or three months.
“The homeowner is stuck with one person or one crew and can’t just stop a project and bring in a new crew,” she added. “In dating, you can dump someone and move on. At the end of the day, it’s not the finished product that makes homeowners come back it is the relationship and the trust.”
Sargsyan believes that even if someone does high-quality work, it will not make up for a terrible personality. It even tips the other way. If a contractor makes mistakes, then owns up to them by explaining the situation, fixing it and apologizing, it builds trust with the homeowner, creating a better foundation for future projects.
Building that trust helps with the innate information imbalance, but the stress is always there with homeownership.
Some home improvement sites offer inspiration to design the project, but Angi focuses on the mechanics so the homeowner can understand the process. When taking on a project, the homeowner needs to understand the details, such as during a kitchen remodel, they can’t use the kitchen for weeks. The pro has to set expectations to take away the uneasiness of the homeowner, which may mean sharing updates every morning.
“It’s even more stressful than choosing childcare,” Hicks said. “It’s their largest investment. You are bringing someone into your home to do the work. It’s the information imbalance. I own a home but that doesn’t mean I’m an expert in homes. Tackling things that they are not experienced in makes them very uncomfortable. There are emotions that come into play in the decision-making process.”
Trust needs to be formed almost instantly because of the dynamics of the business transaction, but it’s a business transaction that happens in a very personal space in a very personal way.
“The homeowner won’t climb on the roof and look at the roof when it’s done,” Hicks said. “Every home improvement project is built on trust and that’s why the homeowner is always seeking information on the pros they are hiring.”
Technology And Data Ease Remodeling Process
The contractor-homeowner selection process has some obvious parallels to dating apps, as Sargsyan already alluded to.
“The way we think about it is spending a lot of time focusing on the art of the match and then meeting homeowners where they are in the process,” Hicks said referring to the Angi match making process. “We work directly with pros to ask the right questions that homeowners can understand, to ask better questions and increase the conversion. If we can really understand the project, then we can make the perfect match. We will make major headway to improve that question set over the next six months.”
Angi also is working on ways to tap into AI to be able to let homeowners talk about things in their own words. Plus, post-project, Angi helps measure job performance.
“We want to measure if the job was done well, is the pro growing their business?” Hicks said. “We want to guide the process from idea to project complete. Getting the match is step one, and then we need to get the work done. We are continually improving the quality of the pros, making sure the job is done right, and bringing it across the finish line.”
AI is becoming a theme in the process, creating additional process efficiencies for both the homeowner and the contractor.
Lowe’s introduced Mylow, an AI tool that shares home improvement expertise anytime and anywhere to make owning a home easier. Developed as a collaboration between Lowe’s and OpenAI, Mylow can answer home improvement questions, plus link the project information to products a user can find and purchase the tools and materials
To reduce project timelines and improve trust and transparency in the process, The Home Depot has partnered with construction project management platform Buildxact to power an AI tool that allows pros to quickly build estimates with accurate material counts and live pricing synched with The Home Depot Pro Xtra accounts.
The technology makes purchasing simple, efficient and error free, taking a lot of the stress out of the homeowner-contractor relationship.
There are other strong remodeling technologies easing the process, and there will certainly be new entries and more investment this year – it’s an exciting time for an outdated industry.
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