Homeowners spend on renovations and repairs despite the uncertain
economy and higher prices
[May 24, 2025] By
ALEX VEIGA
LOS ANGELES (AP) — U.S. homeowners are spending more on home renovation
projects, bucking a broader pullback by consumers amid diminished
confidence in the economy.
Sales at building materials and garden supply retailers rose 0.8% last
month from March, the biggest gain since 2022, and were up 3.2% from
April last year. At the same time, U.S. retail sales overall rose 0.1%,
a sharp slowdown from March.
The trend comes even as prices for home improvement products have been
rising.
The cost of home repairs and remodeling climbed by nearly 4% in the
first quarter from a year earlier, according to Verisk’s Remodel Index.
The strategic data analytics firm tracks costs for more than 10,000 home
repair items, from appliances to windows.
Recent price increases appear to be driven primarily by labor costs and
don't appear to reflect the ongoing trade war that the Trump
administration is engaged in with major U.S. trading partners like
Mexico, China and Canada.
“We haven’t seen panic buying from contractors or investors concerned
about the impact tariffs might have on future costs, or labor rates
being driven up by stricter enforcement of immigration policies," Greg
Pyne, vice president of pricing for Verisk Property Estimating
Solutions, said in a report earlier this month.
Home Depot said Tuesday that it doesn’t expect to raise prices because
of tariffs, saying it has spent years diversifying the sources for the
goods on its shelves. However, executive Billy Bastek said some products
now on Home Depot shelves may disappear.
He also noted that the chain is seeing fewer customers taking on large
home improvement jobs like kitchen and bath remodels, because high
interest rates may be dissuading homeowners from borrowing money to
finance such projects.

Spending on home renovations has remained resilient as elevated mortgage
rates and skyrocketing home prices have frozen out many would-be buyers.
That's kept U.S. home sales in a slump, limiting the market for
homeowners who want to sell.
Many homeowners also bought or refinanced their mortgage when the
average rate on a 30-year home loan was below 3% or 4% in the first
couple of years of the pandemic. That's made them reluctant to sell now,
when the average rate is hovering near 7%.
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A Home Depot logo sign hands on its facade, Friday, May 14, 2021, in
North Miami, Fla. (AP Photo/Wilfredo Lee, File)
 In response, many homeowners have
opted to to invest in sprucing up their home rather than sell and
take on a mortgage with a sharply higher interest rate.
A shortfall in new home construction more than a decade in the
making has kept people living in older homes longer. Nearly half of
the owner-occupied homes in the U.S. were built before 1980 and have
a median age of 41 years, according to an analysis of Census data by
the National Association of Home Builders. That aging stock of homes
has helped fuel the need for repairs and improvements.
Harvard University’s Joint Center for Housing Studies’ most recent
quarterly outlook of home improvement projects that spending on home
renovations will continue to increase this year, despite economic
uncertainty.
Spending by homeowners on maintenance and home improvement projects
increased 0.5% in the first quarter from a year earlier to $513
billion, according to the JCHS' leading indicator of remodeling
activity, or LIRA.
It also forecasts annual increases from here that will drive
spending to $526 billion by the first quarter of next year. That
would represent a 2.5% increase from the first quarter of this year.
Rising home prices and signs of a solid economy have supported the
outlook for higher spending on home improvement, but that could
change if the housing market and economic outlook worsen, said
Carlos Martín, director of the JCHS’ Remodeling Futures Program.
“Building materials retail sales are strong, but we are seeing a
significant downturn in the sales of existing homes and their median
sales price since the last projection — both are known contributors
to home improvements,” Martin said. “Broader economic turbulence
like a recession, a worsening job market or higher inflation would
almost certainly temper our expectations.”
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