Key findings
- Homeowners spent $463 billion on home renovations in the first quarter of 2024 — projections indicate that home renovation spending will continue to decline by $12 billion in the first quarter of 2025.
- Kitchens, bathrooms, heating and cooling systems, and outdoor security rank among the most common renovations in 2023.
- The percentage of homeowners who spent $25,000 or more on home renovations increased to 51% in 2023, a steady increase since 2020.
- More than one-third of homeowners exceeded their home renovation budget.
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. One in five enhanced the lighting outside their homes. Eighteen percent of homeowners intensified their home security, an increase of two 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.
Only a third of homeowners stayed within their home renovation budget.
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:
- Opting for costlier materials
- Project complications
- Additional costs beyond what was initially quoted
Only a third of homeowners stayed within their home renovation budget in 2023.
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 two 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:
- 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.
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 three 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.
What factors are driving home renovations?
Ermanno Affuso, Ph.D.
Chief scientific officer, SABRE (South Alabama Center for Business Analytics, Real Estate and Economic Development)
“The current price of new homes plays a significant role [in home renovations]. When purchasing a new home is prohibitive, homeowners often choose to renovate their existing homes instead.
Consumer income and the overall state of the economy are important considerations as well. In times of economic prosperity, homeowners are more likely to invest in renovations.
Additionally, anticipation about future housing prices and the economy as a whole can influence renovation decisions.”
J. Reid Cummings, Ph.D.
Executive director, SABRE (South Alabama Center for Business Analytics, Real Estate and Economic Development
“Because of the recently increased home values, many homeowners can finance renovations through home equity loans.
Changing family dynamics, such as caring for elderly parents and increased remote work, have led many homeowners to renovate their homes.
A third factor is many homeowners have added environmentally sustainable technologies, some of which the government has incentivized through subsidies.”
What are the latest design trends in home renovations and how have they evolved?
Jacqueline Carmichael, MFA
Associate professor and Interior Design program coordinator
“The latest design trends are focused on countering the ongoing inequities and chaos in the world through wellness and sustainability.
These design trends include holistic, mindfulness, well-being, biophilia and life-centered design. They all share the theme of creating spaces that promote wellness and connection with natural ecosystems and wildlife.
Daylighting is a sustainable practice that involves installing thermally insulated skylights, enlarged windows and accordion window walls to connect with nature easily.”
Andi Morse
Interior designer
“A smart home that allows you to control everything from your phone is something we are finding lots of homeowners want these days. Having everything available at your fingertips can be very appealing.”
What home renovation projects do you think will maximize return on investment (ROI)?
Ermanno Affuso, Ph.D.
Chief scientific officer, SABRE (South Alabama Center for Business Analytics, Real Estate and Economic Development)
University of South Alabama
“The type of renovation that will yield the highest ROI can vary based on geographic location, economic trends and demographic characteristics. Kitchen and bathroom remodeling projects are generally considered to have a high ROI, as they can significantly increase the value of a property.
However, consulting with a real estate expert or housing market analyst is important to determine the best renovation strategy for your area. They can provide valuable insights into which renovations are most likely to maximize the value of your home based on current market trends and local demand.”
J. Reid Cummings, Ph.D.
Executive director, SABRE (South Alabama Center for Business Analytics, Real Estate and Economic Development
“Updating key energy-related systems, such as new HVAC or lighting that reduce operating costs, can greatly increase ROI.
Converting basem*nts or attics or even large closets into increased living areas can produce substantial returns.
Adding exterior features such as decks, screened porches or new landscaping can increase curb appeal and value.”
What design features should homeowners focus on to get the most out of their renovation projects?
Jacqueline Carmichael, MFA
Associate professor and Interior Design program coordinator
“Many homeowners prioritize housing affordability so they can stay in their homes as they age. As a certified kitchen designer, I recommend renovating kitchens and bathrooms with antimicrobial and sustainable features, visitability access and aging-in-place elements that will provide the best return on investment.
The kitchen remains the heart of the home, with features such as storage modifications and recycling systems being the norm. However, we see increased automation, antimicrobial properties in counters and green design elements such as air-purification systems and indoor herb gardens.
Bathrooms with features such as grab bars, touchless faucets and steam showers with seating are becoming more popular. Smart mirrors with LED lamps and defoggers, high-ventilation systems, efficient plumbing, water sense and tankless water heaters also increase in value.”
Andi Morse
Interior designer
“Our clients are asking for kitchens that look neat and clean while offering lots of storage and functionality. They also want designated zones such as a coffee bar, cooking or baking area, and a place for making drinks.
The newest and best appliances are also high on their priority lists.”
How can homeowners ensure their renovation designs remain appealing and timeless over the years?
Jacqueline Carmichael, MFA
Associate professor and Interior Design program coordinator
“Follow the adage: classics are timeless. Strategic use of Carrara marble and honed stone finishes create a sublime look.
Everything should be chosen for health and well-being — from hardware to quartz counter surfaces.
Innovations in this field will continue to emerge. For example, choosing VOC-free, nontoxic paint and reducing off-gassing from carpet flooring materials is essential. Manufacturers are creating recycled and reclaimed materials to create furnishings and fixtures.”
What advice would you offer to someone starting a home improvement project in 2024?
Ermanno Affuso, Ph.D.
Chief scientific officer, SABRE (South Alabama Center for Business Analytics, Real Estate and Economic Development)
“Prioritize renovations that will add the most value to your home, such as kitchen and bathroom upgrades.
Set a realistic budget for your project. Predicting exact costs is challenging due to regional variations but you should still plan ahead and allow for unexpected costs that may arise during the renovation process.
Consider getting quotes from multiple contractors to ensure you’re getting a fair price.
Work with reputable contractors and obtain the necessary permits before starting your project.”
Frequently asked questions about home improvement
What is the difference between remodeling and renovating?
The degree to which you alter the structure of your home determines whether your project qualifies as a renovation or remodel.
Renovating your home includes improving the existing space for looks or purpose. If the structure of your house changes significantly — such as turning a bedroom into a walk-in closet — that project falls under remodeling.
Are home renovations tax deductible?
The IRS distinguishes between home repairs and renovations by outlining specific types of tax-deductible home energy tax credits. For example, the Energy Efficient Home Improvement Credit and Residential Clean Energy Credit allow you to deduct up to 30% of the cost of energy-efficient renovations.
Medically necessary improvements such as modifying doorways and installing ramps may be tax-deductible, but speak to a licensed tax professional to discuss your eligibility for home renovation tax deductions.
How to finance a home renovation?
Cash reserves, personal loans and credit cards can finance a home renovation, according to the U.S. Department of Housing and Urban Development. Homeowners can also search the U.S. Department of Agriculture Rural Development’s database for single-family housing repair loans and grants. Government-backed home repair assistance programs and energy efficiency assistance programs also provide monetary aid to homeowners who may be struggling to finance repairs.
Individual companies specializing in home renovations or repairs often offer in-house or third-party financing. For example, you can obtain financing for window replacement costs through the brand you’re purchasing from. When weighing home improvement funding sources, consider applicable interest rates, repayment terms and any other pending financial commitments.
