AP Business Writer Alex Veiga
LOS ANGELES (AP) — U.S. homeowners are spending more on home renovation projects, making a wider consumer rebound amid declining confidence in the economy.
Retailers of building materials and garden supplies increased 0.8% from last month’s March, the biggest profit since 2022, and increased 3.2% from last April. At the same time, US retail sales increased by 0.1% overall, slowing sharply from March.
This trend occurs despite rising prices for home improvement products.
According to Verisk’s Modification Index, home repair and modification costs rose by around 4% in the first quarter of the previous year. Strategic data analytics companies track the costs of over 10,000 home repair items, from appliances to windows.
The recent price rise appears to be driven primarily by labor costs and does not appear to reflect the ongoing trade war in which the Trump administration is involved with major US trade partners such as Mexico, China and Canada.
“I don’t see any concern that panic purchases from contractors and investors can have on future costs or on labor rates caused by stricter enforcement of immigration policies,” said Greg Pyne, vice president of pricing at Verisk Property Tishing Solutions, in a report earlier this month.
Home Depot said Tuesday it doesn’t expect to raise prices due to tariffs, and it has spent years diversifying the source of products on its shelves. However, executive Billy Basteck said some products currently on Home Depot shelves could disappear.
He also said he sees the chain having fewer clients working on large-scale home improvement jobs, such as kitchen and bath modifications.
Mortgage renovation spending remained resilient as mortgage rates and surged home prices freeze many buyers. It’s putting our home sales in a recession and limiting the market for homeowners who want to sell.
Many homeowners also bought or refinanced their mortgage if the average 30-year mortgage rate was less than 3% or 4% in the first few years of the pandemic. When the average rate is hovered at near 7%, they are reluctant to sell now.
In response, many homeowners choose to invest in growing their homes rather than selling sales and undertaking mortgages with significantly higher interest rates.
With a lack of construction of new homes for over a decade, people have been living in old homes for a long time. Almost half of the homes occupied by US owners were built before 1980, with a median age of 41, according to an analysis of census data by the National Association of Home Builders. The aging inventory of the house helped to promote the need for repairs and improvements.
Harvard University’s Housing Research Center is the latest quarterly outlook for a housing improvement project, where spending on home renovations continues to rise this year despite economic uncertainty.
Homeowners spending on maintenance and home improvement projects rose to $513 billion, up 0.5% from the previous year from a year ago, according to JCHS remodeling activities or LIRA key indicators.
We also forecast an annual increase that drives spending to $526 billion by the first quarter of next year. This represents a 2.5% increase from the first quarter of this year.
Carlos Martín, director of JCHS’s Remodeling Futures Program, said rising home prices and a robust economy signs support the prospect of increased spending on home improvements, but could change if housing markets and economic outlook deteriorate.
“Retail sales of building materials are strong, but since the last forecast, sales of existing homes and their median sales prices have been significantly lowered. “A wider economic turbulence, such as a recession, a worse job market, or higher inflation, will almost certainly ease our expectations.”
Original issue: May 23, 2025, 12:42pm EDT
