🏡 Mid‑Year 2025 Home Services Industry Recap: Residential · Commercial · New‑Construction

🌍 Why Mid‑Year Matters

By July 2025, the home‑services industry—involving residential, commercial, and new‑construction verticals—is navigating a complex landscape: elevated mortgage rates, tight materials markets, labor squeezes, and shifting consumer demand.

• Construction spending dipped 0.4% in June, following similar drops in May. Residential investment hit its fastest contraction since late 2022, with single‑family spending down 1.8% vs. last year.

• Yet remodeling and maintenance hold steadier than new builds, as homeowners pivot toward updating existing spaces rather than starting fresh.

  
  

This churn has deep implications for:

• Residential services (remodeling, HVAC, plumbing),

• Commercial services (cleaning, repairs, facility maintenance),

• New‑construction (super‑spec homes, multifamily, data centers).

A mid‑year recap helps business owners and decision-makers recalibrate bids, inventory, workforce plans—all amid shifting demand patterns

Macro Trends Driving the Market

📉 Interest Rates & Housing Market

• Mortgage rates remain elevated; the Federal Reserve has paused rate cuts for now, weakening single‑family construction starts.

• Deloitte and job‑market data suggest rates may gradually ease into late 2025, opening opportunities later in the year.

  
  

📦 Materials & Supply Chains

• Material prices have stabilized after dramatic inflation in insulation, concrete, metals. In the UK, prices rose 37% since 2020, and some materials 60%+ .

• U.S. supply chains are normalizing, though tariffs, shipping delays, and energy volatility still pressure costs.

🛠️ Labor Crunch

• Skilled labor shortages persist across trades; ~50% of service firms report difficulties hiring technicians, plumbers, HVAC, electricians.

• Aging workforce and fewer trade-program graduates exacerbate delays and increase per-job labor costs.

  
  

♻️ Sustainability & Consumer Values

• 70% of consumers now prefer eco‑friendly services—including green HVAC, solar, insulation upgrades—willing to pay premiums for energy‑efficient work.

• Smart‑home installs and voice‑activated systems are surging (market to reach USD 514+ billion by 2034).

  
  

🤖 Technology & Digital Adoption

• FSM platforms, big‑data analytics, telematics, and mobile apps for dispatch/invoicing have seen 20%+ investment increase since 2016.

• Digital payments rose sharply: nearly half of residential and commercial invoices paid electronically in 2024, projected to exceed 50% in 2025.

• On-demand booking and online searches dominate customer acquisition; 98% of homeowners use digital search to find service provider.

  
  

Residential Home Services Mid‑Year Reality

🛠️ Remodeling & Maintenance: A Slow Descent

• According to Harvard JCHS, the remodeling market will reach ~$509 billion in 2025—still large, but growth is slowing.

• Many homeowners are delaying full‑scale renovations, opting instead for minor cosmetic work, efficiency upgrades, or phased projects.

  
  

💡 Smart Homes & Energy Efficiency

• Nearly 80% of U.S. households now integrate smart‑home tech; voice‑activated systems and connected thermostats are gaining traction.

• Energy savings via smart installation: ~10–15% utility cost reductions provide compelling ROI that homeowners appreciate.

  
  

🚨 Emergency & Seasonal Services

• Search trends peaked for “emergency plumbing,” “no heat,” “EV charger install,” highlighting homeowner urgency.

• Contractors offering 24/7 response and flexible booking gain more calls—even offsetting slower remodel demand.

  
  

👷 Labor Impacts

• With labor tight, projects get rescheduled or quoted higher; customer communication is critical. Only the most reliable scheduling and transparency retains trust.

🧾 Digital & Booking Trends

• Web search and online leads still account for ~98% of new customer inquiries, so SEO, local listing optimization, and call tracking are investments paying off.

Commercial Home Services: Holding Steady

🏢 CRE Segments: Resilient Amid Uncertainty

• According to J.P. Morgan’s mid‑year 2025 report: multifamily, retail, and industrial services remain resilient even in uncertain macroeconomic environment.

• Occupancy and lease renewals continue at strong levels; facility management and HVAC contracts are stable sources of recurring revenue.

  
  

🧼 Cleaning & Restoration

• Commercial cleaning industry forecast: $468 billion globally by 2027, driven by increased focus on sanitation and health protocols.

• Restoration services following weather or aging infrastructure continue to grow; U.S. cleaning & restoration markets together exceed $50 billion.

  
  

🌱 Sustainability in Commercial Settings

• Green retrofitting—LED upgrades, smart building systems, efficient HVAC—continues as building owners seek lower operating costs and ESG compliance.

• Integration of IoT and data platforms in CRE is accelerating, in line with JLL’s call for sustainability and innovation syncs.

🧯 Operational Efficiency

• Commercial property managers expect service partners to deliver streamlined invoicing, predictive maintenance, and digital reporting dashboards.

• The ability to integrate with building automation systems creates differentiation for vendors.

New‑Construction Services: The Curveball

🏗️ New Single‑Family Housing Slowing

• Single‑family construction spending dropped 1.8% in June vs prior year; total private residential down 0.7%.

• High mortgage rates and elevated inventory slow start-ups; result: fewer “new‑build” service contracts in pipeline.

  
  

🌆 Multifamily & Industrial Projects Holding Ground

• Demand for rentals and industrial space (e.g. warehousing, data centers) stays elevated. Data‑center construction is trending up, tied to AI & computing needs.

• Multifamily construction remains relatively resilient due to rental demand and project backlogs.

🏭 Modular & Prefab Gaining Traction

• Companies increasingly using modular construction, especially for commercial and multifamily, to counter labor shortage and speed up delivery.

  
  

📊 Longer‑Term Outlook

• Deloitte sees moderate growth if mortgage rates ease and policy tailwinds (IIJA, IRA) support infrastructure and energy‑segment builds.

Cross‑Sector Strategy: Seizing Opportunity & Overcoming Challenges

💻 Tech & Software Integration

• Firms investing in FSM, telematics, mobile apps, and analytics are reducing waste, enhancing transparency, and improving customer satisfaction.

  
  

👷 Workforce Development

• Offering apprenticeships, upskilling, competitive pay, and flexible schedules helps attract younger tradespeople and reduce delays.

🌍 Sustainability as a Selling Point

• Eco‑credentials (e.g. ENERGY STAR installs, green cleaning, solar panel servicing) differentiate businesses and justify higher margins.

📈 Diversifying Revenue Streams

• Residential firms branching into commercial contracts, HVAC technicians adding EV charger installs, and service businesses offering preventive‑maintenance packages.

💳 Modern Payments & Marketing

• Digital invoicing and online payments (<50% by dollar volume) simplify transactions and improve cash flow.

• Investing in SEO, local listings, call‑tracking, and online engagement capitalizes on consumer search behavior.

What to Watch in H2 2025

1. Interest‑Rate Moves – If the Fed begins rate cuts, expect slower borrowing costs, renewed builder confidence, and uptick in residential and new‑build demand.

2. Material Price Volatility – Watch commodity shifts: any surge in energy or tariffs could re‑inflate costs.

3. Labor Pipeline – Declines in vocational training could tighten labor further; investment now pays dividends later.

4. Consumer Confidence – Reports from Joint Center and HIRI show modest remodeling spend—but a downturn in sentiment would slow discretionary upgrades.

5. Policy Impacts – Implementation of infrastructure and climate‑focused policies (IIJA, IRA, etc.) could spur commercial and data center growth.

   
   

   Key Takeaways & Tactical Moves

   1. Residential services face a mixed mid‑year landscape: fewer big reno projects but strong demand in emergent areas like smart home, emergency plumbing, EV charger installs.

   2. Commercial services remain resilient, anchored by ongoing facility needs, cleaning contracts, and retrofit upgrades.

   3. New‑construction is slower in single‑family but still active in multifamily, industrial, and modular segments.

   4. Smart integration of technology, sustainability offerings, and workforce investment are table stakes.

   5. H2 hinges on macro turnarounds—if mortgage rates fall and consumer/building confidence rebounds, service demand could spike.

   
   

👉 Service sector businesses: evaluate your pipeline now, diversify offering mix, embrace digital tools, and engage workforce training.