Insight

Home Services Industry Update

Read more about M&A trends and activity in this sector

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Stephen Guy
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Stephen Guy

Managing Director, KPMG Corporate Finance LLC

+1 410-949-8909


Home Services Overview

Participants in the home services sector include providers of residential services and solutions such as pest control, remediation, HVAC, exterior and interior services, roofing, landscaping, property management, security solutions, and other related services. Key players in each subsector are categorized based on whether they operate through a franchise model, as noted below:

Sub-sector Public Revenue / EBITDA Multiple Description Key Players
Residential Franchise Services 4.24x / 23.9x Includes companies offering home - based services directly or through their franchise network. These services include pest and termite control, remediation, HVAC, exterior and interior home maintenance, landscaping, commercial property management, and in-home healthcare.
  • Chemed
  • First Service
  • Rentokil Initial
  • Rollins
Residential Non-Franchise Services 1.62x / 8.6x Comprised of companies offering interior and exterior building products, insulation, home improvement and repair, security solutions, installations, and related services
  • ADT
  • Fortune Brands Innovations
  • Frontdoor
  • Installed Building Products
  • TopBuild


 


Sector Perspective

Despite a number of macro-economic headwinds, the U.S. home services market is expected to increase by approximately 10% in 2023


U.S. Home Services is a $657bn Market Poised for Significant Growth

  • The U.S. home services industry maintains significant white space for growth and was forecasted to increase by ~$62bn (+10.4%), from $595bn in 2021 to $657bn in 2022


Total Addressable Market (in $ bn)


 


 


Home Services Sub Segments (in $ bn)


 


 


Mega-Trends Driving U.S. Home Services Industry

  • Record Home Values: Home service spending is expected to increase in line with further increasing home values
    • Per the Federal Housing Finance Agency (FHFA), overall prices of homes have risen 13.6% YoY, the largest increase observed in the past 34 years
    • This increase is mainly due to demographic tailwinds and a pandemic-induced shift in demand from city apartments towards larger homes in the suburbs
  • Rising Interest Rates: With interest rates (30 Year Fixed Rate Mortgage) jumping from 2.7% in Jan-2021 to the current rate of ~6.9%, homebuying has slowed down while home upgrades and maintenance have continued to increase consistent with trends witnessed during the COVID pandemic in 2020 and 2021
  • Increasing Homeownership Rates: Homeownership rates have increased over the last 5 years, from 62.9% in 2016 to 65.8%, resulting in further home improvement spending
  • Aging Housing Infrastructure: The average age of houses has continued to increase to 47 years

Footnotes

Market statistics sourced from Capital IQ and based on 12/31/2022. Industry data sourced from publicly available information

  1. Valuation Multiples represent Enterprise Value to LTM Revenue and LTM EBITDA at 12/31/2022


 


We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below.

Home Services Sector Update
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Angi - The Economy of Everything Home
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