Residential renovation expenditure

Residential renovation expenditure is projected to reach $61.0 billion in 2025, representing growth of 2.9% over the previous year and marking a modest recovery from the cyclical trough experienced in 2023. This performance leaves spending 5.1% below the 2021 pandemic-era peak of $64.3 billion but registers 5.6% above 2019 pre-pandemic levels, demonstrating that renovation activity has largely recovered from the pandemic shock despite elevated interest rates constraining homeowner budgets. The current expenditure level translates to over $105 billion in nominal spending when accounting for inflation, supporting approximately 526,000 jobs directly and indirectly across the renovation services ecosystem and generating $36.9 billion in wages throughout Canadian communities.

Price pressures continue affecting renovation budgets despite moderating from previous peaks. The Residential Renovation Price Index increased 0.9% in the second quarter of 2025 following a 0.3% gain in the first quarter, with costs rising primarily for projects requiring substantial concrete and wood materials as tariff-related uncertainty drove input price volatility. Alberta experienced the largest regional cost increase at 1.0% in the first quarter, while Ontario was the only province to see costs decline at -0.3%, reflecting divergent regional supply-demand dynamics. Among census metropolitan areas, Quebec City and Victoria posted the strongest quarterly growth at 1.4% each, while Toronto recorded a 0.5% decline as cooling housing markets reduced competitive pressure on contractor pricing.

The past five years witnessed strong volatility in renovation expenditure driven by pandemic disruptions and subsequent economic turbulence. Spending declined modestly by 0.9% in 2020 to $57.2 billion as initial lockdowns temporarily halted contractor access and created project uncertainty, though activity proved remarkably resilient compared to new construction which collapsed. Expenditure surged 12.3% in 2021 to an all-time record of $64.3 billion as homeowners trapped at home by work-from-home mandates invested heavily in improving residential spaces, supported by pandemic savings accumulation, government transfer payments, and historically low interest rates.

This boom proved unsustainable once monetary tightening began, with spending declining 4.6% in 2022 to $61.3 billion and falling another 4.0% in 2023 to $58.9 billion as rising borrowing costs, declining home equity, and deteriorating consumer confidence constrained homeowner budgets for discretionary improvements. Recovery began tentatively in 2024 with 0.7% growth to $59.3 billion and strengthened in 2025 with 2.9% expansion as interest rate cuts improved affordability and aging housing stock increasingly required maintenance investments that could no longer be deferred.