First quarter remodeling activity was healthier than expected, helping contribute to a stronger outlook for the next several years, according to the latest Residential Remodeling Index (RRI) from Zonda.
The RRI—a measure of overall pro-worthy remodeling and replacement activity—increased 1.4% quarter-over-quarter and 4.0% year-over-year to an all-time high reading of 176.7. The index level indicates remodeling activity is 76.7% higher than the baseline year of 2007, which was the peak of activity during the 2000s.
In addition to the strong quarter, the RRI is forecasting 4.4% annual growth in 2024, 0.9% grow in 2025 and 2026, and 1.8% annual growth in 2027.
Data suggests a substantial number of impending renovations and moves are simmering below the surface, poised to surge once financial conditions soften. As a result, the remodeling industry is projected to experience elevate levels of spending in the next several years. Zonda projects these deferred projects will occur in 2025 to 2030.
According to the New York Federal Reserve Survey of Consumer Expectations, in 2023 there were two times more homeowners who said they plan to move within two years than just two years earlier. Additionally, the aging housing stock suggests a high number of homes are in their ‘prime remodel year,’ which will drive future remodeling activity according to Zonda. A further trend supporting the projected increase in remodel activity is the dissatisfaction with home quality and fit among buyers who purchased amid the post-pandemic housing shortage.
For 2024, Zonda estimates 19,312,900 pro-worthy remodeling projects will be undertaken in the United States. The number is forecast to increase to 19,535,300 in 2025 and to 19,748,400 in 2026.
On a local market level, the RRI indicates 365 of 384 analyzed metropolitan statistical areas are expected to see annual remodeling project volume growth in 2024. Among these markets, the average growth rate is expected to be 4.6%.
