Home Renovation Facts and Statistics (2023)

Homeowners have developed a renewed interest in home renovation projects over the past three years. According to the Joint Center for Housing Centers of Harvard University (JCHS), home improvement project spending increased from $328 billion in 2019 to $472 billion in 2022, with an estimated 2023 spending of $485 billion. This article will explore the latest industry reports and findings on how home renovation has evolved, statistics for the most popular projects, and the future of residential investments. 

Home Improvement Market Growth

The home improvement industry has grown tremendously in the last few years, mainly due to the pandemic. The National Association of Realtors (NAR) reports that while professional home improvement projects dropped, do-it-yourself renovations soared. With homeowners confined to their homes, they looked for ways to channel their energy and create better entertainment and work-from-home spaces.

According to data from the JCHS, the market grew by 23.8% in 2020 and 2021, exceeding the estimated 12.5% for the same time frame. Americans spent $363 billion on home improvements, renovations, and repairs in 2020 and $406 billion the following year. This was an 11.8% increase from 2020 and nearly three times the average annual growth of 4.4%. By 2022, homeowners’ spending rose to $472 billion.

In 2023, home improvement projects are expected to decline due to housing market issues, such as stalled home sales and mortgage refinancing. Rising labor costs and continuing supply chain issues plague the home improvement industry. Per JCHS, home improvement revenues peaked in the third quarter of 2022 and will start decreasing in 2023. JCHS is still optimistic about some revenue growth, projecting a market increase to $485 billion by the end of 2023.

 

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Average Home Renovation Budgets

Home improvement budgets have also increased over the last few years. According to the 2022 U.S. Houzz and Home Study, homeowners’ median spending increased 20% from $15,000 in 2020 to $18,000 in 2021. This marked the first time since 2018 that homeowners planned to spend more on their renovations than the previous year. However, Houzz predicted spending would dip back to $15,000 in 2022 and has yet to release the final numbers. 

Spending also varied based on homeowners’ ownership status. Houzz found that new home buyers invested up to $30,000 in renovations—double the current national median. Short-term homeowners—meaning anyone who moved into their home one to five years ago—spent $19,000 on average. Spending trends were much lower for long-term homeowners or residents who entered their homes six or more years ago. Their median spending fell in line with the $15,000 national average. 

Interior room renovations were the main focus of 2021 projects. Kitchen renovations were the most popular upgrade and accounted for the highest budget, according to Houzz. Homeowners invested 25% more in kitchen upgrades in 2021 than in 2020, and kitchen investments increased from $12,000 to $15,000 on average. Bathroom remodels, particularly guest bathrooms, saw a 38% increase in spending. Other higher-priced interior projects included laundry and living rooms (33%) and guest bedrooms (28%).

 

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Motivation Behind Home Improvement

Many homeowners upgraded their homes during the pandemic, but it wasn’t necessarily the cause for the spike in renovations. The NAR’s 2022 Remodeling Impact Report found that 83% of surveyed homeowners already planned to renovate regardless of the pandemic. Respondents listed motivations such as upgrading worn-out surfaces, finishes, and materials (30%), adding features and improving livability (20%), and simply wanting a change (16%). 

The satisfaction of home improvement boosted consumers’ overall happiness with their homes. The NAR shared that 84% of homeowners wanted to spend more time in their upgraded homes, while 69% cited increased enjoyment with their residences; 39% of homeowners felt satisfied seeing their completed home improvement project. 

The completed renovations also inspired consumers to further enhance their homes. The NAR found that after completing one remodeling project, 86% of residents felt motivated to renovate other parts of their homes. This motivation continued into 2022 as more than half of the surveyed homeowners had plans to renovate, while 46% were focused on decorating.

 

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Return on Investment (ROI) from Home Renovation

Although many homeowners complete home improvement projects to improve aesthetics or comfort, many also complete them to boost their home value. According to Today’s Homeowner’s ROI of Your Home Remodel report, remodeling projects boost your return on investment (ROI) by 69% on average. These results vary based on the type of project, home location, and total investment. Below, we’ll review remodeling projects by ROI, based on data from the NAR 2022 Remodeling Impact Report. 

Interior Remodeling ROI

According to the NAR Remodeling report, homeowners recoup over 100% of their investment from hardwood floor refinishing (147%) and new wood flooring (118%). Insulation upgrades also provide 100% ROI plus long-term energy savings. According to the U.S. Department of Energy, insulation upgrades can save you up to 20% in heating and cooling costs. Other home improvement projects, such as basement conversions and closet renovations, offer ROIs of 86% and 83%, respectively.