The Home Improvement Industry is Expected to Grow Strong in 2023

The home improvement industry — which includes the sale of building materials, appliances, and decor, along with contractors, tradespeople, and other workers who help to renovate, repair, improve, and upgrade homes — has reached excellent growth results in recent years. The market has grown particularly strong during the COVID-19 pandemic, as people focused on enhancing their living spaces and making their properties more functional. This trend is expected to continue in 2023.

While consumers are still spending on small DIY home improvements, they’re hitting pause on some of the bigger ones. Amid higher prices, some homeowners are finding they can’t afford projects they once thought would be doable, says Joe Derochowski, a home industry adviser at the market research firm Circana.

“I’ve seen some homeowners put their pricier projects on hold, such as tub-to-shower conversions, as they become more conscious of costs,” he said. But the pullback isn’t permanent: Derochowski expects a return to larger renovations later this year, as consumer confidence improves. Meanwhile, Emmanuel Forge, a traveling contractor who offers advice on TikTok and Instagram under the Remodel School brand, says some homeowners are blown away by how much a bathroom or kitchen renovation costs.

In addition to price increases, the home improvement industry is facing challenges from a housing market slump that’s affecting the number of new homes being built. As a result, sales of existing homes have decreased, which means fewer people are buying new home remodeling supplies and hiring contractors for renovations. And because more people are shopping for used remodeling supplies and remodeling services, it can make it harder for companies to find qualified workers.

Even so, the home improvement industry is forecast to have strong growth over the next several years. Its revenues are likely to reach $485 billion by 2024, according to the research firm JCHS. That’s still significantly higher than the average annual growth rate of 4.4% over the last decade.

It’s important to consider the long-term value of any home improvement project before you start spending money. That’s because your property’s resale value can be impacted by the type and amount of renovations you make. A home remodeling expert can help you determine which upgrades will add the most value to your property.

It’s also wise to think twice about any home improvement that makes your house stand out from the rest of the neighborhood, such as a large fountain in your backyard when your neighbors have more modest yards. These types of projects are more likely to detract from your property’s resale price than add to it. So if you’re planning to sell soon, it’s a good idea to get a real estate professional’s opinion before starting any major home improvements. Then you can choose projects that will appeal to the widest range of potential buyers. And you’ll be more likely to get a good return on your investment. A good rule of thumb is to look for projects with a ROI of 100% or more.