The Home Improvement Research Institute (HIRI), a resource for secondary market research on the home improvement industry, announced findings from its latest U.S. Size of the Home Improvement Products Market report, including a revised downward forecast for market growth in 2025 due to continued macroeconomic challenges. Based on changes in market dynamics, the total home improvement market, which reached $574.3 billion last year, is now projected to grow by 2.5% in 2025, a reduction from the 3.4% growth projected in HIRI’s June outlook.
The updated forecast also reveals another downward revision for consumer market growth. Consumer market sales are now expected to accelerate by 1.3%, revised down from 2.6% in June. Professional market sales are expected to grow by 4.6% in 2025, down only slightly from 4.9% in the June forecast.
“Although consumer purchasing power may be shrinking in the short term, research on homeowner sentiment and intent shows that there is still an underlying appetite and demand for home improvement projects,” said Dave King, executive director of HIRI. “Businesses need to consider how they show up to meet homeowners where they are during less flexible financial times. Consider highlighting good/better product lines rather than better/best options, because homeowners will be making tradeoffs in order to bring projects to life.”
The revised outlook can be attributed to several specific economic headwinds:
- Material Costs Remain Elevated: The U.S. home improvement market is facing persistent inflation, with the Consumer Price Index (CPI) showing a 2.7% 12-month change in July and core CPI at 3.1%. The current outlook accounts for existing and new Section 232 tariff-induced price hikes in core goods and services, with overall consumer price inflation expected to rise to the 3.0% range in late 2025 as businesses become more confident passing on increased costs to customers.
- Low Housing Mobility: The housing market is experiencing a significant headwind, with housing starts dropping 5.3% in Q2 2025 to a five-year low and existing home sales declining by 2.7% in June. This is compounded by consecutive monthly declines in home prices, rising inventory levels and a “locked-in effect” from homeowners unwilling to trade low mortgage rates for higher current rates.
- Elevated Interest Rates: Elevated interest rates persist, with the Federal Reserve expected to drop rates only slightly by year-end due to higher core inflation. This has kept conventional 30-year mortgage rates near 7% throughout 2025, directly impacting mobility and the affordability of large home improvement projects.
- Consumer Spending to Be Tested: HIRI has made no changes to projected growth in disposable income in 2025 relative to its June forecast. At that time, a combination of steady wage gains and resilience in spending set the US on a path to a soft landing. Now, consumers have benefited from a steady labor market, but their resilience for spending is set to be tested as consumers express lower expectations in employment and income for the remainder of this year.
Despite any near-term uncertainty, the home improvement products market is projected to grow 4.0% from 2025-2029, with lawn and garden equipment and supplies, nursery stock and soil treatments, hardware, tools and plumbing supplies among the leading product categories in terms of market share and growth during this time.
Navigating this shifting market environment requires businesses to have detailed, reliable data. HIRI provides data and insights not available through any other single source. HIRI members gain access to on-demand data answering crucial questions about market size and customer behavior by customer type, trade, product category, project type and channel preference. For industry professionals, publishers, marketing executives and more, HIRI serves as a data source to help guide business decisions.
