Remodeling Contractors Outnumber New Home Builders, National Association Says

As of 2024, remodeling firms accounted for 56 percent of all residential building construction establishments.

A workman cuts sections of lumber at a housing site in Madison County, Miss., on March 16, 2021. Rogelio V. Solis/AP Photo

The high cost of new residential homes, coupled with elevated mortgage rates, has Americans turning to remodeling as a more cost-effective alternative to new construction.

The National Association of Home Builders (NAHB) stated in its Eye on Housing report, published Nov. 10, that more than half of all residential builders are remodeling contractors. The number of remodeling contractors jumped by 85 percent, to more than 128,000 in the first quarter of 2025 from 69,000 in 2000.

Remodeling establishments are better positioned to withstand difficult economic conditions than new home builders, the NAHB noted. In the years following the Great Recession, the number of remodeling establishments contracted by 8 percent, while about one-third of new residential construction businesses failed. Prior to the recession, remodelers accounted for slightly more than one-third of home builders, but starting in 2011, that number has continued to rise.

The COVID-19 pandemic drove additional demand for both remodeling work and new construction, the NAHB noted. Work-from-home initiatives had homeowners seeking larger living spaces, while historically low interest rates were a boon to new residential construction. The subsequent run-up in mortgage rates and home prices, however, has stymied new construction and stifled home sales, according to Natalia Siniavskaia, assistant vice president for housing policy research at the NAHB.

“Less sensitive to fluctuations in mortgage rates than home builders, remodelers have continued to grow even amid a series of aggressive Federal Reserve rate hikes that sharply increased the cost of home purchases and slowed new construction,” Siniavskaia wrote in the report. “As of 2024, remodeling firms account for 56 percent of all [residential building construction] establishments.”

The average price for a single-family home in September was $420,700, the National Association of Realtors reported. That’s a 4 percent decline from the year’s high mark of $438,600 set in June. Average home prices in September were highest in the West, at $632,900, and lowest in the Midwest, at $323,800.

Mortgage rates, meanwhile, remain elevated despite two interest rate cuts totaling 50 basis points that were initiated by the Federal Reserve in September and October. Interest rates for a 30-year fixed mortgage currently average 6.22 percent, according to Freddie Mac.

That combination has many smaller residential builders turning to remodeling to boost revenue. Most companies that work in the sector average just three to four employees, according to the NAHB .

“As market conditions change, some home builders, particularly smaller single-family general contractors, pivot toward renovation projects to stay and grow their business,” Siniavskaia said. “The remodeling sector’s lower barriers to entry, smaller upfront investments compared to new construction, and fewer regulatory hurdles make the transition easier.”

Although more and more homeowners are interested in remodeling projects, rising construction costs over the past few years have hampered business growth, according to John Salvatore Gelfusa, president and CEO of remodeling specialist company HomeWorks of Chesterfield, Michigan.

“Our project costs have increased just as aggressively as the new home market, shocking many of our potential clients,” Gelfusa told The Epoch Times. “The total number of projects completed has been flat for the past few years, but the total cost per project has increased by approximately 30 percent. We are doing more remodeling in dollar value, but the same number of overall jobs.”