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Due to rising interest rates, more homeowners are investing in improving their homes as opposed to purchasing a new one. Let’s dive deeper into what home improvement projects homeowners are investing in, how much they spent in 2023, and the motivations behind those decisions according to the Angi 2023 State of Home Spending Report.

Home Improvement Spending

Avg Homeowner Spend 2023

Home improvement spending increased 12% from 2022 to 2023 to an average of $9,542 per household; however, the number of home improvement projects declined year-over-year from 3.2 to 2.8. Inflation likely played a role in this change, but despite the effects of inflation, homeowners continue to make a sizable investment in their homes, especially over the past five years. In the eight years since Angi began conducting this study, 2023 marks the second-highest year for overall home improvement spending. The trend suggests that homeowners will spend even more on home improvements in 2024.

Spending by Generation

Overall Spend by Generation 2023

From 2022 to 2023, Millennials continue to outspend the other generations when it comes to home improvements. Home maintenance ranked at the top of the list for Millennials, as it also did for Boomers, the Silent Generation, and Gen X.

By contrast, roof repair topped the list for Gen Z at 27%. Gen Z is at the right age to purchase their first home, but with inflation, low home inventory, high mortgage rates, and high home prices, Gen Z likely purchased a home that required time-sensitive repairs.

The Silent Generation spent the most of any generation on home emergencies ($3,000) but only $600 on maintenance, suggesting the Silent Generation is not spending enough on maintenance to avoid home emergencies.

Click below to learn more about how spending on sustainable products differs by generation.

Related Post: Customers Want You to Care About Sustainability

Most Popular Home Improvements

Most Popular Projects 2023

Unfortunately, only 15% of surveyed homeowners installed solar panels in 2023, preventing solar panels from even earning a spot on the top 12 most popular 2023 home improvements.

The data also indicates that homeowners are spending more on repairs rather than replacement with 20% of homeowners investing in roof repair compared to just 15% who installed a new roof. Cost likely plays a key role with the price tag for replacement far outpacing the cost of repair.

Home Improvement Motivations

Motivators 2024

Before 2020, financial motivations primarily fueled home improvements with return on investment (ROI) topping the list. Since then, the pandemic changed how we view our homes, shifting motivations from financial gain to lifestyle needs and home enjoyment. In 2023, maintaining the current condition of the home emerged as the primary motivator. At 85%, well over the majority of homeowners reported that they love their homes, driving them to invest more money in them.

Both improving a home’s energy efficiency and placing less stress on the environment appear not to be answer options for the question about home improvement motivations. It will be interesting to see how the Inflation Reduction Act, designed specifically to boost home improvement projects in these areas, may impact motivation and project popularity in 2024.

For the first time since 2020, COVID-19 was not a primary reason for not completing a project, rather projects went unfinished due to estimates exceeding expectations or funds were needed instead for emergency or unplanned projects.

Looking to the Future

Future Investment Projects 2024

With increased mortgage interest rates deterring homeowners from purchasing a new home, more homeowners are looking to invest in their current home with 30% of homeowners reporting they plan to make improvements in 2024 for that reason.

Also in 2024, 14% of surveyed homeowners plan to install solar panels and 13% plan to install or take on energy efficiency or eco-friendly projects. Within the next five years, the percentage of homeowners planning to add solar panels increases to 28.7%. With solar panels requiring a more sizable investment than some other improvement projects, it follows that homeowners may have to begin budgeting further in advance.

Homeowners’ five-year plans are also promising for HVAC contractors. Within five years, 28.7% of homeowners plan to upgrade their HVAC system to a heat pump. At 67%, the majority of homeowners reported that they are actively budgeting for these large home investments, and 20% plan on financing when they start the project. With these budget-oriented homeowners, HVAC and solar contractors may want to employ the services of Pearl Partners GoodLeap or Mosaic so they can offer financing options at the time of sale. 

An increase in spending on home improvements looks very promising for 2024, and with Inflation Reduction Act rebates not yet in play, it will be interesting to see how they may impact homeowners’ investment in energy-efficient home upgrades. With state rollouts of IRA rebates imminent for 2024, check out Pearl’s Inflation Reduction Act resources to begin preparing your business now for the increased consumer demand.

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