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The building products sector is operating in a markedly different environment than it did just a few years ago. Higher interest rates, constrained housing supply  and shifting homeowner priorities have combined to create volatility in new residential construction. Against that backdrop, the repair and remodeling (R&R) segment has emerged as the sector’s most stable and durable source of growth. While new construction remains highly sensitive to mortgage rates and consumer confidence, R&R demand is increasingly driven by necessity rather than discretion. As a result, capital and strategic focus are migrating toward segments that offer steadier volumes and more predictable cash flows.

The data underscores this shift. According to the Harvard Joint Center for Housing Studies (JCHS), spending on home improvement and repair reached record levels in 2022 and 2023, with total spending increasing by more than 25% across those two years. Looking ahead, Harvard JCHS projects total home improvement and repair spending to exceed $450 billion in 2025. In an environment where new construction activity remains uneven, R&R has become the primary growth engine for the building products ecosystem.

The structural drivers behind this trend are well established. U.S. housing stock is aging rapidly. The National Association of Home Builders reports that roughly half of all U.S. homes were built before 1980, with a median home age of ~41 years. Homes older than 25 years require ongoing repair, replacement and modernization of core systems, including roofing, HVAC, siding, windows and interior finishes. Unlike new home purchases, which can be deferred when financing costs rise, these repairs are often unavoidable. Roofs leak, systems fail and building envelopes deteriorate regardless of the broader economic cycle. This necessity-driven demand gives R&R a fundamentally different risk profile than new construction

Market projections reinforce the durability of this segment. Grand View Research estimated the U.S. residential remodeling market at ~$527 billion in 2023 and projects a compound annual growth rate of roughly 4.6% through 2030. On a global basis, the remodeling market is expected to expand from ~$2.7 trillion to $3.7 trillion over the same period. NAHB forecasts indicate that total residential remodeling activity will increase by ~5% in 2025, with the share of remodelers undertaking whole-house projects reaching a historic high of 62% in late 2024. Other forecasters, including Global Market Insights, project the global remodeling market to exceed $5 trillion over the next decade, a growth trajectory that outpaces most new construction forecasts.

These dynamics are forcing a strategic reorientation among building products manufacturers. Companies historically focused on new residential construction are reallocating sales resources, adjusting channel strategies and developing product lines tailored specifically to contractors and DIY consumers. As distribution models evolve, specialty dealers, home centers and direct-to-contractor channels are becoming increasingly important. Research from The Farnsworth Group suggests that R&R customers place greater emphasis on product availability, ease of installation and brand recognition than large production builders do. Winning in R&R requires a different operating mindset, one centered on service levels, reliability and contractor loyalty rather than project-by-project pricing.

Demographic trends further reinforce the R&R thesis. Aging Baby Boomers, who control a disproportionate share of housing wealth, are investing in home modifications rather than downsizing. Younger homeowners, many of whom are locked into sub-4% mortgage rates, are choosing to renovate instead of selling and reentering the housing market at higher financing costs. Harvard JCHS estimates that homeowner improvement spending will increase by more than $9 billion between late 2024 and the end of 2025, driven by pent-up demand and improving consumer sentiment as inflation moderates.

For private equity sponsors evaluating building products platforms, exposure to R&R provides meaningful downside protection and a more reliable cash flow profile than new construction alone. In a market characterized by longer holding periods and uncertain exit timing, companies with balanced exposure to both new construction and R&R offer greater optionality. R&R-driven revenues tend to be more recurring, less cyclical and better aligned with value creation strategies focused on operational improvement rather than volume expansion. As a result, the R&R segment is increasingly central to how sponsors underwrite risk, structure portfolios and create durable value in the building products sector.

Photo by Brian Guest

Rising electricity prices are often discussed as a macroeconomic headline, but for home services operators they show up every day on customer bills and, increasingly, in sales conversations. Average U.S. retail electricity prices have risen more than 23 percent since 2019, according to research from Lawrence Berkeley National Laboratory and are expected to increase further over the coming years. Even where inflation-adjusted figures flatten the trend line, customers still feel the impact in absolute monthly dollars. That reality is creating a meaningful shift in how homeowners think about maintenance, upgrades and replacements, and it gives operators an opening to reposition themselves as efficiency partners rather than reactive repair vendors.

The burden of rising power costs is not evenly distributed. In California and the Northeast, residential electricity prices are roughly double the national average, making energy bills a persistent source of household stress. Analysis from PowerLines estimates that ~80 million Americans struggle to pay their electricity bills, with households in high-cost regions hit hardest. In California, inflation-adjusted residential rates have increased by ~6.2 cents per kilowatt-hour since 2019 as utilities invest heavily in wildfire mitigation and grid hardening. In the Northeast, weather volatility and regulatory constraints have pushed average residential rates in New York above 23 cents per kilowatt-hour, ~70% higher than the national average. In these markets, electricity inflation is no longer abstract. It is the backdrop for every service call, tune-up and replacement discussion.

The structural drivers behind these increases suggest relief is unlikely. Much of the U.S. electric grid was built in the 1960s and 1970s, and utilities now face a multiyear reinvestment cycle. Industry disclosures indicate that replacing aging infrastructure already accounts for roughly a quarter of total utility capital spending. The World Resources Institute reports that utilities have requested more than $70 billion in cumulative rate increases through 2028 to fund grid upgrades. These investments improve reliability and resilience, but they also lock in a higher long-term cost base for consumers. For home service operators, this environment rewards engagement rather than caution. Each visit becomes an opportunity to connect routine work, such as tune-ups, duct sealing, insulation coordination or control upgrades, to measurable reductions in energy usage that help customers manage a bill they cannot fully escape.

Operators best positioned to benefit from this backdrop are those that have already leaned into service-heavy, recurring revenue models. Data from eMerge M&A shows that maintenance, repair, replacement and refrigeration service collectively account for ~40% of HVAC contractor revenue. That service mix helps offset the volatility of installation-driven cycles and keeps operators relevant between major capital projects. Membership plans, seasonal maintenance programs and targeted efficiency upgrades fit naturally into this environment. For customers, they provide manageable steps toward lower usage and improved comfort. For operators, they create recurring touchpoints that strengthen retention, increase lifetime value and smooth cash flow.

Equipment selection reinforces the opportunity. Heat pumps are a clear example. Space heating accounts for ~40% of household energy use in the United States, making efficiency gains in this category especially impactful. Modern electric heat pumps can deliver three to four units of heat energy for every unit of electricity consumed, significantly outperforming legacy systems. Even as per-kilowatt-hour rates rise, the efficiency gains often translate into lower total energy bills. For operators, the advantage lies not just in selling the equipment, but in training technicians to size systems correctly, install them properly and explain the economics in clear, relatable terms during in-home consultations.

Turning electricity inflation into a competitive advantage ultimately comes down to execution. Owners can align ride-alongs, coaching and sales scripts around efficiency outcomes rather than technical specifications alone. They can document and share real-world examples where maintenance or upgrades reduced usage for comparable homes in the same market. They can ensure marketing materials, membership pitches and websites speak as clearly about energy savings and bill predictability as they do about comfort and reliability.

Electricity prices are rising for reasons tied to infrastructure age, climate risk, policy mandates and new sources of demand. Home service operators cannot control that trajectory, but they can control how they respond. Businesses built around service-led models, efficiency-focused conversations and recurring maintenance are better positioned to turn a painful trend for consumers into a durable advantage for themselves. In an environment where power will almost certainly cost more over time, the operators who help customers use it more wisely will be the ones who win the work and keep the relationship.

WestGate Partners (WGP) is an independent sponsor focused on acquiring and growing lower middle market businesses in essential residential and commercial services. We bring institutional experience, tailored capital with hands-on partnership to help owners transition, grow and preserve their legacy. By partnering with strong operators, we build enduring businesses in economically-insulated industries.