The economy has been on a rollercoaster. Inflation, interest rates, and trade policy uncertainty have made consumers cautious about spending. Yet one industry continues to expand steadily: home improvement.
The numbers tell a compelling story. The home improvement market reached $574.3 billion in 2024 and is projected to grow at roughly 4% annually through the end of the decade. By 2029, the market is expected to hit $688 billion.
What’s driving this growth? Why do homeowners keep investing in their properties when the economic outlook feels uncertain? The answer lies in three interconnected factors: the “lock-in effect” keeping people in their homes, an aging housing stock that demands constant attention, and the simple reality that some repairs cannot wait for “better times.”
Here’s what’s really happening in the home improvement market and what it means for homeowners and contractors alike.
The $574 billion industry that won’t slow down
Home improvement isn’t a discretionary luxury for most Americans. It’s a necessity woven into the fabric of homeownership. When your roof leaks, your HVAC fails, or your plumbing backs up, you don’t have the luxury of waiting for the economy to improve.
According to the Home Improvement Research Institute (HIRI), the total home improvement market expanded by 3.7% in 2024. The forecast calls for 3.4% growth in 2025 and 3.5% in 2026. These aren’t boom-era numbers, but they represent steady, resilient expansion in an industry that serves a fundamental need.
The Joint Center for Housing Studies at Harvard University projects that remodeling spending alone will reach $509 billion in 2025. This represents a modest 1.2% increase from 2024, but it follows two years of decline. The market is finding its footing again.
What makes this growth particularly notable is the context. Consumer confidence has been volatile. Trade policy uncertainty has created headwinds. Material costs remain elevated. Yet homeowners continue to invest in their properties.
The reason? Home improvement occupies a unique position in household budgets. As Hardware Retailing notes, home improvement spending falls below essential costs like healthcare and groceries but above purely discretionary spending like vacations and dining out. It’s a priority that persists even when households tighten their belts.
What’s driving the “lock-in effect”
One of the most powerful forces in today’s home improvement market is what economists call the “lock-in effect.” Here’s how it works.
Millions of homeowners secured mortgages when interest rates were at historic lows. According to data from Realtor.com cited by NARI, 56% of homeowners with mortgages have interest rates below 4%. A remarkable 22% have rates below 3%.
Today’s mortgage rates hover in the 6-7% range. For a homeowner with a 3% mortgage, selling their home and buying a new one at 7% would mean a dramatic increase in monthly payments. Even if they could sell at a profit, the financing costs of a new home make moving financially unattractive.
The result? Homeowners stay put. And when you stay in your home longer, you invest in it.
This lock-in effect has created a surge in renovation activity. Instead of trading up to a larger home, families add additions. Instead of moving to a newer property, they update kitchens and bathrooms. The money that might have gone toward a down payment on a new home gets redirected into improvements on the current one.
Home prices have continued to rise, adding another layer to the equation. With home values forecasted to increase 4.1% in 2025 according to CoreLogic data, homeowners see their existing properties as appreciating assets worth investing in.
America’s aging homes need constant care
The lock-in effect would matter less if America’s housing stock were young. But it’s not. The median age of owner-occupied homes in the United States was 43 years in 2023, up from just 31 years in 2005.
Think about what that means. The typical American home was built in 1980. That roof is likely 40+ years old. The HVAC system has been replaced once and may need replacing again. The kitchen appliances are decades past their design life.
Older homes require more maintenance, more repairs, and more updates. Roofs leak. Plumbing corrodes. Electrical systems need upgrading to handle modern power demands. These aren’t optional improvements. They are necessities that cannot be deferred indefinitely.
The aging housing stock creates what economists call “non-discretionary demand.” Unlike a kitchen remodel chosen for aesthetic reasons, replacing a failing roof or a broken furnace is a necessity. Homeowners may delay discretionary projects during uncertain times, but essential repairs must happen regardless of economic conditions.
This dynamic helps explain why 34% of homeowners plan to increase their home improvement spending in the next 12 months, according to HIRI’s Q1 2026 report. Many are responding not to choice but to necessity.
Consumer vs. professional: Who’s spending what
The home improvement market splits into two distinct segments, and understanding both helps explain the full picture.
The consumer (DIY) market represents roughly twice the spending of the professional market. HIRI projects consumer market growth of about 3.9% annually, with spending expected to reach $449 billion by 2028. This segment includes homeowners tackling projects themselves, buying materials from retailers like The Home Depot and Lowe’s.
The professional (DIFM – Do-It-For-Me) market is growing more slowly at around 2.7% annually but is still substantial. Professional market revenue is projected to hit $228 billion by 2028. This segment includes contractors, remodelers, and tradespeople hired by homeowners.
Both segments are active. According to The Farnsworth Group’s Q4 2024 research, 72% of homeowners have planned projects in the next three months. Among DIYers, 74% cite cost savings as their primary motivation for doing the work themselves.
The professional market is also seeing steady demand. There are now 726,026 remodeling businesses in the United States, a 4.2% increase from 2024. Over the past five years, the industry has added approximately 111,800 new businesses.
What this means for homeowners and contractors
The steady growth in home improvement spending has practical implications for both sides of the market.
For homeowners, the current environment presents both opportunities and challenges:
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Planning is essential. With material costs elevated and labor markets tight, getting multiple quotes and building contingency budgets into projects is crucial.
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Timing matters. While some repairs cannot wait, discretionary projects may benefit from careful timing as contractors compete for work.
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DIY can save money, but know your limits. The 74% of DIYers who cite cost savings as motivation are making smart choices for projects within their skill level.
For contractors and home improvement businesses, the outlook remains positive:
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Steady demand is the new normal. The aging housing stock and lock-in effect create a reliable pipeline of work.
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Labor remains a constraint. The construction industry continues to face skilled labor shortages, which can create opportunities for contractors who can hire and retain talent.
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Material cost volatility requires attention. Tariffs and trade policy uncertainty may affect pricing for lumber, steel, and other key materials.
The industry structure supports this stability. Home improvement retailers like Home Depot and Lowe’s dominate the market, with combined revenues exceeding $228 billion in 2024 according to IBISWorld data. Their scale and distribution networks help ensure materials remain available even during supply chain disruptions.
The outlook through 2029
Looking ahead, the home improvement market appears positioned for continued steady growth. The fundamentals driving the market are structural, not cyclical. The housing stock will continue to age. Mortgage rates are unlikely to return to the sub-4% levels that would unlock the housing market. Homeowners will continue to invest in their properties.
HIRI projects that the total home improvement market will reach approximately $688 billion by 2029, representing average annual growth of about 4% from 2026 to 2029. The consumer market will lead this growth, but the professional market will see substantial gains as well.
The Harvard Joint Center for Housing Studies’ Leading Indicator of Remodeling Activity (LIRA) provides shorter-term guidance. After modest gains in 2025, the indicator suggests continued expansion as homeowners respond to repair needs and the lock-in effect persists.
What could change this outlook? A significant drop in mortgage rates could unlock the housing market and reduce renovation demand. A deep recession could force homeowners to defer even essential repairs. But barring these scenarios, the home improvement market appears set for steady, resilient growth.
Investing in your home makes sense in any economy
The home improvement market’s resilience comes down to a simple truth: your home is your biggest investment, and taking care of it isn’t optional. Whether you’re replacing a failing roof, updating an aging kitchen, or adding space for a growing family, these investments protect and enhance the value of your property.
The three pillars supporting this market aren’t going anywhere:
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The lock-in effect will persist as long as mortgage rates remain elevated and homeowners hold low-rate loans they’re unwilling to give up.
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The aging housing stock will continue to require maintenance, repairs, and updates. The median home age will likely increase further, not decrease.
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Essential repairs cannot be deferred indefinitely. Roofs will leak, furnaces will fail, and plumbing will corrode regardless of economic conditions.
For homeowners, this means planning and budgeting for home improvement is a permanent part of financial life. For contractors and retailers, it means a reliable market with steady demand.
At Hardware Huddle, we help DIYers and homeowners navigate this market with practical advice, product reviews, and project guides. Whether you’re tackling a repair yourself or hiring a professional, understanding the broader market dynamics can help you make smarter decisions about when and how to invest in your home.
Why is the home improvement market growing when the economy is uncertain?
The home improvement market is growing because it is driven by structural factors rather than discretionary spending. The ‘lock-in effect’ keeps homeowners in place due to high mortgage rates, the aging housing stock requires constant maintenance, and essential repairs cannot wait for better economic times. According to HIRI, 34% of homeowners plan to increase spending in the next 12 months.
What is the ‘lock-in effect’ in the home improvement market?
The lock-in effect occurs when homeowners with low mortgage rates (56% have rates below 4%, 22% below 3%) choose to stay in their homes rather than sell and buy at today’s higher rates (6-7%). This leads them to invest in renovations instead of moving, driving home improvement spending.
How old is the typical American home?
The median age of owner-occupied homes in the United States was 43 years in 2023, up from 31 years in 2005. This aging housing stock requires more repairs, maintenance, and updates, creating non-discretionary demand for home improvement services.
What is the projected size of the home improvement market by 2029?
According to HIRI and Hardware Retailing, the home improvement market is forecasted to reach approximately $688 billion by 2029, growing at an average annual rate of about 4% from 2026 to 2029.
Are homeowners doing more DIY or hiring professionals?
Both segments are active. The consumer (DIY) market is roughly twice the size of the professional market, with 74% of DIYers citing cost savings as motivation. However, 72% of homeowners have planned projects in the next three months, and many hire professionals for complex work.
What types of home improvement projects have the best return on investment?
According to Fixr.com, exterior projects like garage door replacement (193.9% ROI), entry door replacement (188.1% ROI), and manufactured stone veneer (153.2% ROI) offer the highest returns. Kitchen and bathroom remodels also provide strong returns for homeowners.
