Remodeling Gaining Larger Share of Residential Construction Market

The National Association of Home Builders (NAHB) reports that remodeling is capturing an increasingly dominant share of the residential construction market as the nation’s housing stock ages. Driven by the high cost of new homes and a shift in consumer demand toward cost-effective renovations, the number of remodeling firms has nearly doubled over the last 25 years. This structural shift reflects a growing trend where home builders are diversifying into remodeling to sustain business growth amidst changing economic conditions.

According to an analysis of 25 years of Quarterly Census of Employment and Wages (QCEW) data, the remodeling sector has experienced a sustained structural shift, growing from fewer than 69,000 companies in 2000 to more than 128,000 by the first quarter of 2025. Remodelers now account for 56% of all residential building construction establishments, a significant increase from the mid-2000s housing boom when their share remained between 38% and 39%. This growth is fueled by both consumer demand for practical housing improvements and a supply-side trend of home builders expanding their services to include renovation projects.

The remodeling sector has demonstrated notable resilience compared to new home construction, particularly during economic downturns. During the 2008 housing crash, the number of remodeling establishments fell by only 8% between 2007 and 2012, while approximately one-third of home builders went out of business during the same period. This discrepancy caused the remodelers' share of the residential sector to rise sharply to 46% by 2011, establishing a trajectory of steady growth that continued through the following decade.

Recent market dynamics, including the post-pandemic housing boom, have further accelerated this trend. While both home builders and remodelers saw growth due to low mortgage rates and the demand for larger living spaces for remote work, remodelers expanded at a faster rate. By 2022, the share of residential construction firms dedicated to remodeling reached 54%, and it has continued to climb to its current majority position as new homes remain out of reach for many buyers.