The landscape of the U.S. home remodeling sector is evolving in 2025, due to the interplay between tariff pressures and a potential rebound in renovation activity. During the pandemic, there was a surge in home improvement projects as people spent more time at home, and spent less money on going out to eat and travel. That demand has since cooled, but new economic realities–most notably the threat of tariffs–are reshaping the outlook for the industry.
A central concern addressed is the fear that tariffs on imported materials like wood, steel, and flooring could dramatically increase remodeling costs. However, this fear is largely overstated for the remodeling sector. According to the National Association for the Remodeling Industry (NARI), only about 7% of materials used in U.S. residential construction are imported. This means the direct impact of tariffs on overall project budgets is relatively minor.
For example, in a $150,000 kitchen remodel, material costs typically represent only 5-6% of the total budget (with lumber at 1%, trim and casing at 2%, and cabinets at 2-3%). Even if these materials were subject to full tariffs, the additional cost would be about $2,250 to $3,000. In contrast, new home construction, which relies more heavily on imported materials, would see a much larger budget impact from tariffs.
Beyond tariffs, broader market forces are fostering optimism for a rebound in remodeling activity. Data from the Joint Center for Housing Studies’ Leading Indicator of Remodeling Activity (LIRA), which projects that homeowner spending on improvements and repairs will increase every quarter throughout 2025 and into 2026–a trend not seen since the third quarter of 2023. This resurgence is partly attributed to increased sales of existing homes, as new homeowners typically invest in upgrades soon after moving in.
The Center acknowledges that tariffs could influence the outlook, but emphasizes that high home values and other strong economic indicators are currently supporting increased spending on home improvements. These factors, combined with demographic trends such as an aging housing stock and record levels of home equity, are expected to sustain solid demand for remodeling projects.
Custom integrators and remodeling professionals, in the current period of market uncertainty driven by tariffs and supply chain disruptions have an opportunity to reassess supplier relationships, negotiate better terms, and build greater flexibility into contracts. By instituting a modest tariff surcharge (e.g., 5% on new proposals), businesses can protect profitability while navigating cost fluctuations. Additionally, reviewing existing inventory and leveraging it before tariff-related price increases take effect can improve cash flow and operational efficiency.
While tariffs introduce some uncertainty and modest cost increases, their direct impact on home remodeling budgets is limited due to the low proportion of imported materials used in the sector. More importantly, strong housing market fundamentals, such as high home values, increased home sales, and substantial home equity, are driving a rebound in remodeling activity. Industry professionals who proactively adapt to these conditions, refine their supply chains, and communicate value to homeowners are well-positioned to benefit from the anticipated upswing in demand.
Lighting manufacturers that are strong in the home remodeling sector, such as portable lamps and lighting for kitchens and baths, are well positioned to benefit from a surge in home remodelling.
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