Older houses, high home equity to bolster remodeling in 2025, say homebuilders

Bobby Dalheim //Senior Editor of Case Goods and Global Sourcing//February 27, 2025

An aging housing stock, high levels of home equity and favorable demographics will create growth prospects for the remodeling sector in 2025, according to the National Assn. of Home Builders.

Although positive, growth seems to come at the expense of the housing market. Inflation of housing-related costs remains a concern, says the NAHB. And while lower mortgage rates are potentially on the horizon, it says the process will be bumpy, as long-term interest rates could remain flat or even increase with larger fiscal deficits.

“Remodeler sentiment has remained in positive territory, well above the break-even point of 50, since the second quarter of 2020,” said NAHB Economist Eric Lynch. “One of the key factors for growth in the remodeling market is the aging housing stock, which continues to drive renovation projects. 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.”

An NAHB survey of remodelers found mostly positive sentiment, especially when compared with other housing sectors. Challenges, according to Lynch, include availability of labor and certain materials and products, namely appliances, windows, doors, HVAC equipment, plumbing fixtures and cabinets.

NAHB forecasts a 5% gain in residential remodeling activity in 2025 and a 3% additional gain in 2026.

“Although the remodeling industry faces certain headwinds, favorable demographics and characteristics of the current housing stock will boost remodeling activity in 2025,” said Lynch.

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