Study: First-time buyers are shaking up home improvement

As affordability concerns and competitive new build pricing shape home purchasing trends and home improvement demand, HIRI advises building product manufacturing professionals to focus on developing cost-effective, value-driven products that meet the needs of today’s buyers.

HIRI's key findings include:

Housing dearth means homebuyers are taking longer and stretching budgets. 

Amid the increase in first-time homebuyers, affordability challenges and supply constraints extended home searches. The average home search timeline increased from 3.6 months in 2022 to 5.7 months in 2024. Many buyers ultimately purchased homes that stretched their budgets with the justification that the purchase would be a long-term investment.

Buyers invest in upgrades while sellers prioritize high-impact renovations. 

HIRI found that 53 percent of sellers made targeted, pre-sale home improvements, and 85 percent of buyers made improvements within the first year of purchase. 

Homebuyers concentrated on discretionary upgrades, particularly in kitchens, bathrooms, bedrooms and outdoor spaces. These improvements were typically modest, often emphasizing painting and flooring over full-scale remodels. Sellers, in contrast, focused on return-driven renovations, such as curb appeal enhancements and interior updates, to maximize resale value. Sellers spent an average of over $16,000 on exterior improvements—by far the most of any project category.

DIY profiles are evolving. 

Since 2022, DIY engagement has also shifted, with millennials taking the lead, particularly at the intermediate level. Homeowners turned to professional contractors for major upgrades, such as solar panels, pool additions or whole home mechanics related improvements.

Market demand shifts toward smaller homes, larger lots. 

Homes purchased in 2024 were smaller than in 2022, with an average size decreasing from 2,964 square feet to 2,218 square feet. While buyers opted for fewer bedrooms and bathrooms, there was increased demand for larger lots, indicating a preference for outdoor space and, in some cases, attached multiunit dwellings. 

Personalization as a motivator for home improvement also rose by 18 percent, reflecting a desire for lifestyle-driven changes and functional, customized living spaces.

“The results we see from HIRI’s '2024 Recent Home Buyers and Seller Study' reflect the shifts in how current buyers approach homeownership, with affordability and long-term value driving decisions more than ever,” said Dave King, executive director at HIRI. “Pent-up demand among first-time homebuyers is growing, and we know from HIRI’s research that home improvement interest is highest within the first year of purchase. As a result, we anticipate continued demand for value-based home improvement solutions focused on functionality and livability.”

Implications for building products manufacturers and retailers

• As affordability concerns remain at the forefront, homebuyers and renovators are seeking cost-effective, value-driven products. Businesses should cater to this demand by offering solutions that balance price and performance to create high perceived value.
• Home improvement product marketing teams have a prime opportunity to target first-time homebuyers with relevant advertising and marketing efforts, particularly within the first year of their home purchase, when interest is highest.
• Improvements to kitchens, bathrooms and outdoor spaces will continue to be top priorities for homebuyers, making efforts to increase brand share and develop products in these areas particularly advantageous for industry players.
• Millennials are embracing intermediate-level DIY projects, so brands should focus on easy-to-install products that cater to this demographic while offering professional solutions for larger-scale renovations. Understanding these shifts will allow businesses to stay ahead in a competitive market by delivering products and services that align with evolving homeowner needs.

More takes from the top

Dave King, HIRI's executive director, shared additional insights with HBSDealer. 

Below, King offers five tips to meet the surging demand for affordable, value-driven products, as well as more practical guidance for the year ahead.

1. Focus on good-better-best (GBB) offerings.

• Pros recognize the GBB approach employed by brands, and a significant portion purchase from brands offering these options.
• Offering a range of GBB product lines can cater to clients with varying budget constraints while still providing options that represent value.
• Most pros routinely purchase from brands offering some combination of Good, Better, and Best product lines. This indicates a willingness to stock and use different tiers of products.
• When considering a GBB approach, brands (and by extension, pros managing inventory) should prioritize quality -- even at the lowest tier.
• Avoid sacrificing quality for cost savings. Clearly communicating the quality standards for each tier is also important. 

2. Consider price sensitivity and switching brands.

• If clients are increasingly demanding affordable options, pros may need to stock more of the "Good" or "Better" categories in GBB offerings.
• Pros do switch brands, with price being a primary driver for switching, along with quality and speed of fulfillment/availability.
• To meet demand for affordability, pros might consider carrying brands known for more competitive pricing. 

3. Adapt to market conditions and economic concerns.

• Economic and material cost concerns persist for contractors, especially smaller firms. This reinforces the need to be mindful of inventory costs and offer more affordable solutions to clients facing similar pressures.
• Contractors are adapting to market conditions by expanding services and investing in technology. While not directly inventory-related, this broader adaptability suggests a willingness to adjust product choices based on client demand and cost considerations.
• Rising product costs are a persistent challenge, often leading contractors to increase project prices.
• To mitigate this impact on clients seeking affordability, carefully managing inventory and potentially sourcing more cost-effective alternatives could be beneficial. 

4. Leverage supplier relationships and new brands.

• Nearly half of contractors experimented with new products or brands as a response to supply chain disruptions.
• This openness to new options could extend to sourcing more affordable, value-driven products if their usual suppliers' prices increase.
• Contractors prefer that promotions come through retailer/supplier channels.
• Pros can stay informed about potential cost savings or value-added deals from their suppliers that could influence inventory decisions to offer better value to clients. 

5. Understand homeowner trends. 

• Homeowners prioritize price and quality when making home improvement product purchases.
• This aligns with the concept of "value-driven," where a balance between cost and performance is key.
• Pros should keep this in mind when selecting inventory. 

The shift in DIY vs. contractor-led projects 

Looking back to 2020 and forward to 2029, HIRI anticipates the consumer spend range to stay between 69.5% and 65.7%. 

Consumer percent of total spend, according to HIRI data: 

• 2020 - 69.5%
• 2021 - 68.2%
• 2022 - 66.7%
• 2023 - 67.0%
• 2024 - 65.4%
• 2025 - 65.3%
• 2026 - 65.7%
• 2027 - 66.4%
• 2028 - 66.3%
• 2029 - 65.7% 

The decline in DIY’s share is driven by several factors. As the housing stock ages, a larger proportion of projects shift from discretionary updates to essential replacements such as roofing, HVAC, and plumbing ,which typically require professional skills. Additionally, the evolving homeowner demographic, with older owners now constituting a growing share of the market, tends to favor the reliability and quality of contractor-led work over DIY solutions. 

What categories are expected to grow in 2025?

Dimensional lumber and boards will see the most growth in 2025, followed by lawn and garden equipment, and insulation and weatherization products. Lawn and garden equipment, soft surface floor coverings, and roofing and supplies are forecasted right now to be the biggest areas of opportunity through 2029.