Home renovation statistics and trends: Our 2024 report

Posted on June 13, 2024 by Rebecca Henderson

Article courtesy of USA Today Homefront

Despite home renovation statistics and spending trends signaling a pending decline
post-pandemic, many homeowners plan to invest in their home. The home renovation industry
has quickly surpassed the $400 billion threshold within the last two years, according
to reports from the Joint Center for Housing Studies of Harvard University (JCHS)
Leading Indicator of Remodeling Activity (LIRA).

 “There is also a social component, where homeowners may be influenced by their neighbors
or friends who are renovating their properties,” said Ermanno Affuso, professor of
economics and finance at the University of South Alabama in Mobile. “Factors such
as income, interest rates, and intangible factors like sentimental value and rational
expectations all play a role in driving the growth in home renovations.”

Kitchens and bathrooms remain top of mind for most home renovators. However, the 2022
National Association of Realtors Remodeling Impact Report reveals that less popular
remodeling projects such as refinishing hardwood floors and new wood flooring offer
a larger return on investment. 

To better understand the home renovation industry, the USA TODAY Homefront team analyzed
the 2024 U.S. Houzz & Home Study, Harvard’s JCHS Q1 2024 LIRA report and the National
Association of Realtors Remodeling Impact Report. 

Our findings reveal noteworthy trends as homeowners continue to remodel — whether
it’s for themselves or to ready their home for sale. 

Home improvement market in 2024

Homeowners spent $463 billion on renovations in the first quarter of 2024, according
to LIRA. However, that’s $26 billion less than the peak of renovation spending in
the third quarter of 2023. LIRA predicts a spending decline of over seven percent
in remodeling dollars spent in Q3 2024, despite a modest rise to $451 billion projected
moving into the new year.

Only slightly more than half (52%) of American homeowners plan on renovating this
year, compared to 55% in 2023, according to the Houzz study. While the top 10% plan
on a renovation budget of $80,000 (a $5,000 drop from one year prior), the median
planned budget for most households hovers around $15,000, similar to 2023. 

Kitchens remain the most renovated rooms (29%), with guest bathrooms (27%), primary
bathrooms (25%) and living rooms not far behind (21%).

In comparing the planning phase of a remodel versus actual construction, kitchens
tend to take the longest, with over nine months of planning for just over five months
of work. Forty-two percent of homeowners hired a construction professional, with the
majority seeking a general contractor to perform the necessary work. Among the 47%
of homeowners who hired a specialty service provider, electricians and AC/heating
specialists comprised a 40% share each. 

Common home improvement projects

Last year, homeowners focused on improving kitchens and bathrooms, heating and cooling,
and exterior projects — namely, outdoor security. 

The median spend on these projects increased from 2022 to 2023. Here is the Houzz
study breakdown:  

• The median spend on kitchen renovations rose by 20% to reach an average of $24,000. 
• The median spend on bathrooms rose to $15,000 on average, 11% more than in 2022.
• The heating median spend rose to $5,500, an increase of 10%. 
• The median spend for cooling rose 10% to $6,000. 
• The median spend on roofing rose to $12,000, double the median spend for windows and
  skylights, the second-most popular exterior upgrade.

Homeowners also invested in exterior projects such as garden beds and borders, lighting
and decks — 1 in 5 enhanced the lighting outside their homes. Eighteen percent of
homeowners intensified their home security, an increase of 2 percentage points from
2022. 

Kitchens and bathrooms remain the most renovated rooms, with plumbing, electrical
and automation (such as smart lighting, thermostats and outlets) comprising the top
home systems upgraded last year. Due to the specialty professional services required
to access and upgrade these systems in kitchens and bathrooms specifically, labor
costs can quickly add up. 

The majority of your kitchen budget is allocated to materials. A custom home builder,
Construct Elements in Los Angeles, estimates the following costs: cabinetry (averaging
$6,700), appliances and ventilation (averaging $3,800), and countertops (averaging
$2,700). These costs are in addition to an average of $4,600 in installation and labor
costs. Cost will vary by location and demand.

Home improvement budgets and spending

Americans spent a sizable chunk of change on home renovations in 2023, more so than
a year prior. The median spend on home renovations totaled $24,000, a 60% increase
from 2020, according to the Houzz study. However, homeowners in the top 90th percentile
spent a median of $150,000, a 77% increase from 2022. 

Indeed, over half of homeowners spent $25,000 or more on renovations in 2023, up 14
percentage points from 2020. “Kitchen and primary bathrooms are current splurges,
and they are typically the most expensive rooms to renovate,” said Andi Morse, interior
designer and founder of Morse Design in Atlanta. “Cabinetry for kitchens and primary
bathrooms usually costs more than anticipated. Further, organizational inserts for
kitchens can really add to the cost.”

Median spending on kitchens increased to $24,000 in 2023 while primary bathroom median
spending reached $15,000. Homeowners also spent a median of $12,000 on roofing.

Although nearly a quarter of homeowners had no renovation budget in 2023, 76% set
one initially. Of those homeowners who set a budget, nearly 40% exceeded it compared
to 34% of homeowners who went over budget two years prior. Homeowners’ top reasons
for going over budget include the following: 

• Opting for costlier materials
• Project complications
• Additional costs beyond what was initially quoted

Motivations behind home improvement projects

In 2023, homeowners, including those who recently purchased a house, found the time
and financial means to finally renovate, according to the Houzz study. Home damage
triggered a renovation for 18% of homeowners. The percentage of homeowners who renovated
in preparation to sell (8%) increased by 2 percentage points, as did those who repaired
their homes after a natural disaster (6%). 

Seventeen percent of homeowners reported adapting to recent lifestyle changes among
the top reasons for renovation. These lifestyle shifts may spur homeowners to integrate
more energy-efficient systems and materials into the home. Jacqueline Carmichael,
associate professor and Interior Design program coordinator at Howard University in
Washington, D.C., is seeing people transitioning to all-electric solar-powered systems
that include smart panels with automation, LED dimmers, sensors and timers, Energy
Star appliances and insulated doors and windows.

Home renovations by generation

Over half (56%) of Baby Boomers renovated their homes in 2023, comprising the largest
percentage of all generational groups who undertook renovations, according to the
Houzz study. 

In contrast, only 3% of Seniors and 0.2% of Gen Zers marked home renovations off their
to-do list. 

Here is the breakdown of what Houzz found out about professional home renovation help:

• The frequency of hiring increases with age, from 86% of Millennials to 96% of Seniors. 
• Over half (57%) of the Senior population hired a specialty service provider, the highest
  among all generations. 
• Four in 10 Gen Xers and Baby Boomers hired construction professionals. 
• Gen Xers, Baby Boomers and Seniors were likelier to hire a design professional than
  Millennials.

Baby Boomers and Gen Xers nearly matched one another in median spending on overall
renovations in 2023, hitting $24,000 and $25,000, respectively. Other findings include
the following: 

• Gen Xers and Baby Boomers spent a median of $15,000 on bathroom renovations. 
• While Gen Xers spent a median of $25,000 on kitchen renovations, Millennials spent
  $10,000 less. 
• Among those in the 90th percentile, Gen Xers and Baby Boomers had median spending
  of $180,000 and $131,000, respectively.

Cash savings and credit cards were the most common renovation funding sources in 2023. 

• Eighty-six percent of Millennials relied on cash compared to 82% of Seniors.
• Credit card usage was lowest among Seniors at 32% and highest among Millennials (43%). 
• Renovation funding from a secured home loan was highest among Gen Xers. 
• Ten percent of millennials used a gift/inheritance or tax refund to fund their home
  renovations. 
• Gen Xers and Baby Boomers are more likely to upgrade windows or skylights and outdoor
  lighting.
• Millennials and Gen Xers upgrade their security the most among generations. Furniture
  purchasing trends have flip-flopped, favoring Millennials and Gen Xers over Seniors
  and Baby Boomers. 

Gen Xers and Baby Boomers are more likely to upgrade windows or skylights and outdoor
lighting. Millennials and Gen Xers upgrade their security the most among generations.
Furniture purchasing trends have flip-flopped, favoring Millennials and Gen Xers over
Seniors and Baby Boomers. 

ROI of home renovation projects

The 2022 Remodeling Impact Report by the National Association of Realtors (NAR) Research
Group compared the National Association of the Remodeling Industry’s (NARI’s) estimated
costs of home renovation projects to the NAR’s projected value of those improvements
at resale. The resulting Recovered Project Cost percentage quantifies an estimated
return on investment (ROI) homeowners can expect for common home renovations. 

Interior home remodel projects ROI

The majority of homeowners (30%) remodeled to upgrade outdated materials and surfaces,
with only 1 in 10 homeowners renovating for aesthetics. Among interior renovations,
refinishing hardwood floors, installing hardwood flooring and upgrading the insulation
brought the highest return on investment.

Nearly half of realtors recommend painting the entirety of your home’s interior before
selling, and 3 in 10 recommend a kitchen upgrade.

Exterior home remodel projects ROI

Replacing your home’s roof returns 100% of your investment, according to the NAR 2022
Remodeling Impact Report. When renovating your roof, consider adding gutter guards
to prevent debris from clogging gutters and preventing proper drainage. Although installing
vinyl and wood windows returns roughly two-thirds of your investment, you will reap
the benefits of energy efficiency in reduced heating and cooling costs by up to 30%,
according to the U.S. Department of Energy.

For select homeowners, renovating outdoor spaces can result in a non-monetary ROI.
“Outdoor patios and decking spaces are instrumental for well-being,” said Carmichael,
who encouraged designing seating areas for soaking up vitamin D and meditation.

When planning an outdoor project, consider working with reclaimed or composited wood,
repurposed pavers or concrete and solar-powered LED decorative lamping for energy
efficiency.

Expert-approved home renovation tips and insights

Here is what experts have to say when it comes to making the most of your home renovation
projects.