10 Key Takeaways from the Q2 2025 Contractor Activity Tracker

The home improve­ment indus­try is con­stant­ly evolv­ing, shaped by eco­nom­ic con­di­tions, mar­ket shifts, and indus­try-wide changes. All of these fac­tors impact how con­trac­tors oper­ate, as well as influ­enc­ing their strate­gic deci­sion-mak­ing and pur­chas­ing behav­iors. For home improve­ment prod­uct brands, it’s impor­tant to stay abreast of how con­trac­tors are oper­at­ing amidst what’s hap­pen­ing on a broad­er scale, from the health of the hous­ing indus­try to labor short­ages and emerg­ing tech­nolo­gies. It is impor­tant to antic­i­pate how those trends might affect con­trac­tors, their projects, their prod­uct pur­chase jour­neys, and how they are engag­ing with build­ing prod­uct brands. Some trends have held steady year over year, such as the pref­er­ence for in-store shop­ping and an uptick of cer­tain projects and activ­i­ties based on the sea­son. Oth­ers are more vari­able as tech­nol­o­gy advances, pub­lic sen­ti­ment fluc­tu­ates, and glob­al trade dynam­ics shift. 

Key Insights into Contractor Activities and Attitudes in Q2 2025

This year has brought a num­ber of eco­nom­ic shifts that invari­ably affect the home improve­ment indus­try. Because pro sen­ti­ments are dynam­ics, The Home Improve­ment Research Insti­tute part­ners with The Farnsworth Group quar­ter­ly to track pro behav­iors. Below, we’ll cov­er top find­ings from the Quar­ter­ly Con­trac­tor Busi­ness Sen­ti­ment Track­er for Q2 2025, which explores these trends, while also pro­vid­ing insight into the types of projects con­trac­tors are cur­rent­ly engaged in, the chal­lenges they’re fac­ing, and their opin­ions about key stake­hold­ers, includ­ing man­u­fac­tur­ers and suppliers.

1. Contractor Activity Holds Steady in Q2

Con­trac­tor activ­i­ty remained sta­ble across most project types dur­ing the sec­ond quar­ter of this year, with enhance­ment projects and remod­els lead­ing con­trac­tor activ­i­ties. The data also shows that repair work held steady at about 34%, unchanged from the pre­vi­ous quar­ter. At the same time, we’re see­ing a slight increase in terms of the aver­age num­ber of projects bid on and award­ed, with both num­bers up from the same quar­ter in 2024. To stay aligned with sta­ble con­trac­tor activ­i­ty trends, your build­ing prod­uct brand should pri­or­i­tize core liv­ing and enhance­ment prod­ucts and their place in the market.

2. Projects Under $5K Gained Share

High-val­ue projects — or those val­ued at $100K or more — fell to a five-quar­ter low, demon­strat­ing a pos­si­ble shift in home­own­er spend­ing con­fi­dence when it comes to how they invest in their prop­er­ties. There appears to be hes­i­tan­cy around major ren­o­va­tions and upgrades. Mean­while, small jobs of $1K to $5K gained share dur­ing the sec­ond quar­ter, and projects val­ued at under $1K held steady. Be pre­pared to mar­ket prod­uct cat­e­gories that are most rel­e­vant to these project sizes, while prod­ucts and mate­ri­als used for larg­er, upscale projects may drop as these types of home improve­ment activ­i­ties slow when look­ing at the mar­ket broadly.

3. Market Growth Expectations are Softening

Con­trac­tor opti­mism dipped again dur­ing the sec­ond quar­ter of 2025, although the sec­tor as a whole could still be described as ​“cau­tious­ly opti­mistic.” The study shows that only about half of con­trac­tors antic­i­pate mar­ket growth in the next 12 months, which is down from Q1 and notably low­er than 2024 lev­els. Addi­tion­al­ly, rev­enue expec­ta­tions also remain below pri­or-year highs. This could be a response to a vari­ety of macro­eco­nom­ic con­cerns and pres­sures, from trade tar­iffs and infla­tion to increased cost of liv­ing for home­own­ers and high mate­r­i­al costs.

4. Competitive Pressure is Leveling Off

After a year of height­ened com­pet­i­tive ten­sion, mar­ket dynam­ics may be sta­bi­liz­ing. Only 52% of con­trac­tors believe there is now more com­pe­ti­tion, com­pared with 60% in the same quar­ter last year. At the same time, opti­mism around busi­ness rev­enue remains tem­pered. The major­i­ty of indus­try pro­fes­sion­als antic­i­pate their rev­enue will ​“grow slight­ly” in the next 12 months, but that is still below the per­cent­ages we observed in 2024, when opti­mism lev­els were rel­a­tive­ly high. 

5. Labor Availability Continues to be Top Challenge for Contractors

Sev­er­al fac­tors can con­tribute to home improve­ment jobs being post­poned or can­celed, such as sched­ule and mate­r­i­al avail­abil­i­ty, but labor avail­abil­i­ty has been on the rise the past cou­ple of quar­ters. About 43% of con­trac­tors report hav­ing expe­ri­enced some sort of dif­fi­cul­ty around labor in the past three months as well. Of those who expe­ri­enced chal­lenges in this area, avail­abil­i­ty was the top issue, fol­lowed by cost, with qual­i­ty of labor and reten­tion dip­ping slight­ly after both reach­ing a high last quarter. 

6. Tariffs and Material Costs Create Unease

Mate­r­i­al costs and tar­iffs remain key macro­eco­nom­ic con­cerns among indus­try pro­fes­sion­als, affect­ing the out­look for the home improve­ment prod­ucts mar­ket. In par­tic­u­lar, mate­r­i­al costs have been a source of pres­sure for sev­er­al con­sec­u­tive quar­ters. We’ve only more recent­ly start­ed track­ing how con­trac­tors feel tar­iffs will impact their busi­ness over the next 12 months. The per­cent­age of con­trac­tors cit­ing tar­iffs as a major con­cern rose from 35% in the first quar­ter to 44% in the sec­ond quar­ter. The shift under­scores grow­ing unease over inter­na­tion­al cost strains. Mean­while, infla­tion­ary pres­sure con­cerns con­tin­ue to ease, which could be a good sign for build­ing prod­uct brands. 

7. Energy Efficiency and Tech Integration Seen as Opportunities for Growth

Look­ing ahead, about 44% of con­trac­tors feel like ener­gy effi­cien­cy and renew­able ener­gy instal­la­tions are the biggest oppor­tu­ni­ties for growth in the home improve­ment sec­tor — a con­tin­u­a­tion of the opin­ion expressed in Q1. Tech­nol­o­gy inte­gra­tion is the sec­ond-high­est cat­e­go­ry, although it saw a small decrease from ear­li­er this year. Eco-friend­ly and health-con­scious mate­ri­als and sus­tain­able and green ren­o­va­tions increased slight­ly in Q2. Based on these sen­ti­ments, build­ing prod­uct brands might con­sid­er pri­or­i­tiz­ing cost man­age­ment and posi­tion­ing your prod­ucts for ener­gy-effi­cient and sus­tain­able projects.

8. Outdoor Materials and Supplies Experience Seasonal Increase

When it comes to what home improve­ment con­trac­tors are pur­chas­ing the most, build­ing mate­ri­als and struc­tur­al sys­tems — from adhe­sive and dry­wall to lum­ber and fas­ten­ers — are con­sis­tent­ly the top cat­e­go­ry. Land­scap­ing sup­plies, stand­alone grills and/​or firepits, and exte­ri­or paint also saw notable gains dur­ing Q2. While such sea­son­al demand can be expect­ed, we’re also see­ing a mod­est shift toward exte­ri­or project invest­ments in gen­er­al. To cap­i­tal­ize on this trend, it’s impor­tant to align adver­tis­ing and pro­mo­tions — as well as inven­to­ry — with sea­son­al out­door demand.

9. Competitive Bids are a Growing Challenge for Contractors

While mate­r­i­al costs are a con­cern, con­trac­tors are also allo­cat­ing a small­er per­cent­age of their project bid to this cost, as opposed to labor and over­head. Along the same lines, our research shows that com­pet­i­tive bids have over­tak­en mate­ri­als cost uncer­tain­ty as the top bid­ding chal­lenge, with near­ly half of con­trac­tors list­ing it as a chal­lenge they faced in the past three months. Notably, bud­get con­straints fell from 39% in Q1 to 28%. Labor cost uncer­tain­ty also dropped to a five-quar­ter low in terms of the bid­ding chal­lenges cur­rent­ly fac­ing contractors.

10. Product Availability, Delayed Payments and Indecision are Key Pain Points

When work­ing on projects with home­own­ers, con­trac­tors are wit­ness­ing an increase in inde­ci­sion, mak­ing it the most sig­nif­i­cant pain point. Cost con­straints and time­ly pay­ment are also con­sis­tent chal­lenges. In terms of pain points when work­ing with man­u­fac­tur­ers, prod­uct avail­abil­i­ty has eased sig­nif­i­cant­ly from a sharp spike in Q1. The prod­uct deliv­ery time­line also dropped. In com­par­i­son, poor prod­uct qual­i­ty and lack of prod­uct sup­port ticked upward.

Marketing to Home Improvement Contractors in 2025 and 2026

The con­struc­tion indus­try is con­tin­u­al­ly shaped by a vari­ety of fac­tors that influ­ence con­trac­tors’ oper­a­tions and strate­gic deci­sion-mak­ing. The Quar­ter­ly Con­trac­tor Busi­ness Sen­ti­ment Track­er study, a col­lab­o­ra­tion between HIRI and The Farnsworth Group, eval­u­ates the impact of broad­er eco­nom­ic trends, mar­ket con­di­tions, inter­est rates, and the over­all health of the hous­ing indus­try on con­trac­tors’ busi­ness­es. As a HIRI mem­ber, you can access the full report and gain insight to help you effec­tive­ly engage this crit­i­cal cus­tomer base.