The total home improvement market is projected to grow 3.4% in 2025, a reduction from the 5% growth projected in the Home Improvement Research Institute’s (HIRI) March outlook.

HIRI announced findings from its latest U.S. Size of the Home Improvement Products Market report, including the revised forecast for total market growth due to macroeconomic challenges.

The updated forecast shows a change in anticipated growth rates between the professional and consumer markets. Consumer market sales growth is expected to increase by 2.6% in 2025, revised down from the projected 4.9% growth in the March outlook. Professional market sales are projected to grow at a faster rate of 4.9%, which is in line with the March outlook.

“While our latest forecast reflects some near-term adjustments due to economic headwinds, the long-term picture for the home improvement market remains one of significant opportunity,” says Dave King, HIRI executive director. “Looking out over the next five years through 2029, we anticipate a net gain in total market spend of roughly $300 billion in additional spend. While this growth is expected to be stronger toward the latter half of the period, it reflects that the underlying appetite and demand for home improvement projects are still robust.”

The revised outlook reflects several economic headwinds. New tariffs, ranging from 10% to 25% on materials like copper and lumber, and additional tariffs on imports from China, Canada and Mexico, along with labor shortages, are expected to raise construction costs.

The housing market remains sluggish due to the “locked-in effect,” as homeowners are hesitant to sell amid high mortgage rates. Builders are cutting prices, and while existing home sales may gradually rise through 2026, housing starts are expected to stay flat. Slowing wage growth and rising prices are limiting gains in real disposable income, with core inflation projected to hit 3.9% in 2025. The labor market is also expected to cool with payroll growth slowing and unemployment reaching 5.0% by late 2026.

The report also provides a 35% probability of a pessimistic scenario, including the potential for a two-quarter recession beginning in the middle of 2025.