2024 Home Renovation Market Report: Where Demand is Booming and Why

October 15, 2024
Koffler Research Team

The U.S. home renovation market is undergoing a dramatic shift in 2024, driven by rising homeowner equity, population growth, and regional demands. As more Americans choose to renovate rather than sell, the industry is seeing surges in activity—particularly in coastal and urban areas.

But where exactly is the demand highest, and what’s fueling it? Using data from Google Ads and market trends, this report breaks down the factors influencing renovation demand, from median household income to urbanization.

Whether you’re a contractor, supplier, or marketer, understanding these trends is critical to staying ahead in a competitive landscape.

A Data-Driven Look at the 2024 Home Renovation Market

We analyzed the renovation market in the United States on a per state basis, leveraging Google Ads keyword data from September 2023 to August 2024 as a proxy for understanding the market. Our goal was simple—determine how much renovation demand varies by region, focusing on commonly searched home improvement projects.

We selected 15 keywords based on high-demand renovation projects, primarily for bathrooms and kitchens, which tend to be the most frequently remodeled spaces.

These keywords represented a mix of DIY enthusiasts looking for supplies and homeowners seeking professional service providers. For example, terms like “bathroom tile” target DIY enthusiasts who may be searching for supplies themselves, while “bathroom remodeling near me” captures those searching for contractors to do the job for them.

Beyond bathroom and kitchen terms, we also incorporated keywords for other high-demand projects, such as roofing, flooring, garage doors, and deck/patio construction.

Overall, our keywords are representative of home renovation projects commonly associated with significant return on investment according to industry standards; Today’s Homeowner highlights this in their ROI analysis.

Taken together, the selected keywords generated a combined U.S. monthly search volume of nearly 1.5 million searches, with average cost per click (CPC) ranging between $1.39 and $124.43, reflecting the competitiveness and interest in these home renovation categories.

Advertising Value per Household

Based on Google Ads keyword data from September 2023 to August 2024, we aimed to calculate an approximate value of the advertising spend per household across different states in the U.S. renovation market.

To quantify renovation demand on a state-by-state basis, we developed a metric called Advertising Value per Household.

Advertising Value represents an estimate of the potential worth or effectiveness of advertising for a particular keyword or search term. This metric combines keyword search volume with the average top-of-page bid in Google Ads to estimate how much businesses are willing to spend on renovation-related advertising in each state. By normalizing this value per household, we can better compare regions, leveling the playing field across states of different sizes.

Formula for calculating Advertising Value per Household:

Advertising Value = (Sum of Search Volume) × (Average Top of Page Bid High) ÷ (Number of Households)

And here’s how it works:

• Sum of Search Volume refers to the total monthly searches across the set of keywords in each state.
• Average Top of Page Bid High is what businesses are willing to pay for their ad to appear at the top of the search results page through Google Ads. In general, the higher the bid, the more competitive and valuable the keyword.
• Number of Households is a normalization factor. By dividing the advertising value by the number of households, we get a more accurate, per-household perspective that avoids skewing the data due to population size. This allows for fairer comparisons between densely populated and sparsely populated states.

Essentially, this metric is a valuable tool for identifying which regions might have higher demand for home renovation services, guiding advertising strategy and making it easier for renovation businesses to discern where their advertising dollars will have the greatest impact.

Which States are Home Renovation Hotspots

To better understand regional demand for home renovations, we categorized U.S. states into five distinct groups using Advertising Value. The groups are color-coded to provide a visual representation of each state's demand level:

• Very Low: Dark Red
• Low: Red
• Medium: Yellow
• High: Light green
• Very High: Dark green

At the extremes, Alaska ranks with the lowest advertising value at 0.035, while Colorado tops the list with the highest advertising value at 0.41. These values highlight significant differences in renovation demand across the country, with some states showing much more interest in home improvement than others.

The Link Between Households and Advertising Value

We found a moderate positive correlation (r = 0.39) between the Number of Households and Advertising Value Ratio. This suggests that states with more households tend to show higher renovation demand.

However, this moderate correlation suggests that the number of households may not be the sole nor strongest driver. Other factors—like property values, weather conditions, and population growth—may have a bigger role in shaping advertising value ratio and renovation demand.

Key Drivers Influencing Renovation Demand

A closer look at the data reveals several important trends that help explain why some states rank higher in advertising value. The following characteristics were found to see higher advertising value ratios.

Coastal States

Coastal states have a higher average advertising value ratio (0.23) compared to inland states (0.18). This suggests that the renovation market may be stronger in coastal states, possibly due to higher property values, more frequent weather-related damage, or greater overall demand for home improvements in these areas. For example, California has consistently high property values and frequent weather challenges, such as earthquakes and coastal erosion, which contribute to increased demand for renovations. Similarly, Virginia and Delaware have extensive coastal areas that are prone to storm damage and flooding, so they require regular maintenance and renovation. Coastal properties, particularly in expensive markets, may require more upkeep, making them a hotspot for renovation projects.

States with Extreme Weather

States often hit by severe weather, like hurricanes in Florida (0.34) or Texas (0.31), or wildfires in California (0.23), show higher advertising value ratios. For instance, Hurricane Ian that hit Florida in 2022 resulted in economic losses topping $12.6 billion, according to the U.S. Economic Development Administration. The need for repairs and renovations after weather-related damage may drive significant demand in these regions.

States with Population Growth

States experiencing rapid population growth—including Texas, Florida, North Carolina and Georgia—tend to have higher advertising value ratios. As more people move in, the demand for housing and renovations swells, especially in areas with new homeowners or expanding communities.

Ron Starr, president of Koffler Sales, gave his insight into people's housing choices in response to recent interest rate fluctuations.

Retirement-Friendly States

States known for being retirement-friendly, such as Florida and Arizona, show higher demand for renovations. Perhaps as more retirees settle in these areas, they often invest in home upgrades to make their spaces more comfortable and accessible, boosting renovation demand.

Correlation Analysis of Key Socioeconomic Factors Affecting Renovation Market

To gain deeper insights into the drivers of renovation demand, we conducted a correlation analysis to examine the relationship between Advertising Value and several key socioeconomic variables.

The correlation coefficient (r) is a statistical measure that indicates the strength and direction of the relationship between two variables, with values ranging from -1 to 1. In our analysis, we are particularly interested in variables with positive correlation coefficients, as they suggest a direct relationship between the variable and higher advertising value.

We also calculated R², which explains how much of the variance in advertising value can be attributed to each variable. While R² values may appear moderate, they offer valuable insights into the driving forces behind renovation demand.

By understanding how factors like household income, immigration rate, urban population percentage, and others correlate with advertising value, we can better pinpoint the regions where renovation demand is most pronounced. This analysis can help refine market strategies and advertising efforts to align with the states showing the highest potential.

After analyzing datasets by state across multiple factors—including cost of living, population growth, household income, employment rate, homeownership rate, weather-related damage, and urban population percentage—we found that three three factors showed the strongest correlations with advertising value. Immigration rate, median household income, and urban population percentage had the highest correlation coefficients with advertising value.

Median Household Income

Higher median household incomes correlate with higher advertising values, suggesting that affluent areas with more disposable income tend to spend more on home renovation projects. Affluent homeowners tend to invest in luxury upgrades and high-end finishes.

Median Household Income vs. Advertising Value

• Correlation Coefficient: 0.4986
• R²: 0.249
• Key States: D.C., Massachusetts

Urban Population Percentage

Urban areas typically have older infrastructure and smaller properties, which often leads to higher demand for renovations and repair services. Stricter building codes and frequent repairs also keep the renovation market robust in cities.

Urban Population Percentage vs. Advertising Value

• Correlation Coefficient: 0.5570
• R²: 0.31
• Key States: California, Nevada

Final Thoughts: What We’ve Learned from the Data

Our analysis of Google Ads keyword data reveals that states with higher advertising value per household are often coastal, urbanized, and experiencing significant population growth or immigration. Factors like urbanization, median household income, and immigration show moderate positive correlations with advertising value, indicating these are key drivers of increased renovation demand in affluent and growing urban areas.

While Google Ads keyword data offers valuable insights into market demand, it may not fully capture the complexity of the home renovation landscape. Future research should consider further variables such as local market competition, demographic characteristics like age, education level, and family size, as well as local economic conditions. Including these factors would provide a more comprehensive understanding and help develop more targeted strategies to serve different regional markets and maximize renovation demand.

Appendix

Keywords Analyzed:

• kitchen cabinets
• general contractor near me
• roofer near me
• vinyl flooring
• bathroom vanity sink
• granite countertops
• bathroom remodeling near me
• bathroom tile
• deck builders near me
• roof shingles
• kitchen remodel near me
• foundation repair near me
• home remodeling near me
• patio pavers
• garage door replacement

Correlation Datasets:

• Cost of Living
• Population Growth
• Home ownership Rate
• Median Household Income
• Employment / Unemployment Rate
• Weather-Related Damage
• Urban Population Percentage

Additional Sources:

• Houzz Research
• Harvard LIRA
• Today’s Homeowner ROI of Remodel
• United States Census Bureau Population Trends

Research Team:

• Shushan Wang, University of Southern California
• Isabella Jiang, University of Pennsylvania