The housing industry in 2025 is entering a transformative phase. Shifting economic conditions, record-high homeowner equity and lingering labor shortages are driving changes across construction and remodeling markets.
Single-family housing is poised for modest growth, while multifamily construction faces declines due to housing market imbalances. At the same time, deferred demand for remodeling projects promises significant opportunities.
Navigating these trends will require adaptability and strategic planning. Builders, contractors, and homebuyers must align their efforts with emerging opportunities, particularly in remodeling aging housing stock and addressing postponed projects. Research in this outlook is based on excerpts from Zonda Building Product Outlook research, which is paid subscription research access for the building products/housing industry.
There is forecasted modest growth in single-family housing in 2025, supported by prospective buyers seeking space and flexibility. Conversely, multifamily construction faces challenges, with a significant drop in demand expected from a surge in completions during late September 2024.
This "pivot point" will push the balance between under-construction houses and completed multifamily units to critical levels, slowing new home sales temporarily.
|
Aspect |
Single-Family Housing |
Multifamily Construction |
|
Growth Outlook |
Modest Growth |
Declines due to oversupply |
|
Demand Drivers |
Space and flexibility |
Economic pressures |
|
Challenges |
Labor shortages |
Surplus completions from 2024 |
Builders should focus on efficiency and adaptability to capitalize on single-family home demand. Partnering with reliable suppliers, like LS Building Products, can help navigate market and inventory fluctuations and keep projects on schedule. Incentives for first-time homebuyers could also create additional demand for new and remodeled properties.
Remodeling activity is entering a much-anticipated rebound. Since 2016, window and door project rates have remained below pre-pandemic levels, creating a backlog of deferred updates.
Data shows that we can expect the pool of "eligible" homes for remodeling to grow 2-3x higher than 2019 levels by 2025. Many homeowners, particularly those in properties over 20 years old, are prioritizing upgrades as an alternative to moving, especially amid high mortgage rates.
With remodeling demand expected to rise significantly through 2028, professionals should prepare for increased activity, particularly in windows, doors, and exterior upgrades. Our siding options offer stylish and durable solutions to enhance homes’ functionality and aesthetic appeal.
Labor shortages in the housing industry remain a pressing issue in 2025. These workforce gaps, combined with extended build cycles and product shortages, mirror trends from past economic tightening periods like the early 1980s.
Rising costs and project delays further complicate the landscape, making planning and supplier partnerships more critical than ever.
Pros:
Cons:
Builders must streamline operations and rely on trusted material sources to mitigate disruptions and keep projects on track. The National Association of Home Builders (NAHB) highlights addressing these workforce issues as a top priority.
Economic conditions in 2025 will heavily influence real estate markets and existing home sales. Pandemic-era savings have run dry, limiting budgets, particularly for mid-range remodeling projects. However, record-high homeowner equity—over $12 trillion since 2020—offers a unique opportunity for prospective buyers to fund renovations.
"Record-High Homeowner Equity: $12 Trillion Since 2020"
Additionally, dissatisfaction with limited housing supply has doubled the number of households planning to move ASAP compared to 2021. This shift points to a coming wave of pent-up remodeling and purchasing activity, even if interest rates remain relatively high.
The housing market in 2025 will experience a significant wave of deferred demand. Aging housing stock, particularly homes over 20 years old, will drive remodeling projects as updates become a necessity. This backlog includes critical areas like window and door replacements, which forecasts predict will grow significantly through 2028.
Builders and contractors positioned to meet these demands with efficient processes and reliable resources will have a competitive edge. As homeowners shift their focus to improving their properties, the opportunity for growth in the remodeling sector is immense.
The housing industry in 2025 offers both challenges and opportunities. Builders must navigate persistent labor shortages, shifting demand between single-family and multifamily construction, and economic pressures like rising inflation. At the same time, deferred remodeling demand and record-high homeowner equity provide a strong foundation for growth.
By addressing these trends and preparing for evolving consumer priorities, builders and contractors can position themselves to succeed in a transformative real estate market.
For high-quality materials and solutions to meet your project needs, contact us to learn how we can support your success.
Aging housing supply, deferred maintenance, and high homeowner equity will fuel a surge in remodeling projects, especially for windows and doors.
Multifamily construction is expected to face declines due to a surge in completions in 2024, creating an oversupply that impacts new home sales and other real estate market dynamics.
Tight budgets, due to the depletion of pandemic-era savings, will limit mid-range remodeling projects. However, record-high homeowner equity will drive renovations and updates, particularly in older properties.
Persistent workforce shortages, rising labor costs, and extended build cycles will challenge builders, making efficiency and planning essential. Builder sentiment indicates that these challenges could persist beyond 2025.
Builders should focus on addressing aging homes, particularly those requiring window and door replacements, to tap into the growing pool of deferred remodeling projects. Efficient processes and partnerships with reliable suppliers will be critical in meeting buyers' expectations and ensuring timely project completion.