Home services are on a roll. This is according to Yelp’s State of Services report, which launched today to track health and activity in local services, as seen on Yelp. Given its ubiquity as a tool to help consumers find local businesses (and for local businesses to self promote), Yelp has a robust and reliable sample.

As for home services’ dominance, the TLDR version (more detail below) is that more home services businesses opened in 2024 than any other category. It saw 217,000 new openings, which is up 11 percent year-over-year. In fact, it’s the only category that grew in the number of business openings.

As for why home services are on top, there are several potential reasons but one notable factor flows from the state of the economy. Specifically, high mortgage rates have compelled many homeowners to stay where they are. So they put money into renovations, as opposed to moving up the property ladder.

“In a time of tightened consumer spending after years of high inflation rates, the home services sector is seeing remarkable growth, leading all categories in new business openings,” Yelp director of enterprise solutions Kadecia Ber told Localogy Insider. ” his trend is fueled by rising consumer interest in rental-friendly home improvement, weatherproofing, and pet-related services, underscoring the dynamic nature of the home services market and the entrepreneurial spirit driving its growth, as businesses adapt to meet the evolving preferences of consumers.”

Highlight Reel

Going deeper into the report’s findings, here’s a highlight reel we extracted for Localogy readers.

• Home services led in new business openings at 217,000 – the only category to see growth (11 percent) over last year’s numbers.
• This was not only the case nationally but individually in every U.S. state
• States leading in ‌new home services openings include California (26,000), Florida (24,000), and Texas (22,000)
• In terms of percentage growth over last year, the states that led the way were South Dakota (up 39 percent), Arkansas (up 35 percent), and Vermont (up 28 percent).
  • It’s notable that South Dakota is in the lead here and we wonder how much of that has to do with South Dakota’s lack of state corporate income tax.
• On the user side, home-improvement-related searches are likewise seeing growth on Yelp, including home organization (up 362 percent), wallpapering (up 41 percent), home automation (up 27 percent), and furniture assembly (up 10 percent).
  • Interestingly, supply is meeting demand, with strong new-business growth in these exact categories, including wallpapering (up 61 percent), furniture assembly (up 25 percent), home automation (up 23 percent), and home organization (up 18 percent).
• Further supporting the claim that demand is down for home buying, Yelp data show a 108 percent increase in searches (and a 12 percent increase in business openings) for apartment agents.
  • At the same time, real estate agents saw a 23 percent decline in both searches and new openings.

Lastly, just for fun, what are the fastest-growing home services companies? You can check them out, and their Yelp listings, below…

1. Five Star Bath Solutions  (Consumer interest up 397%)
2. Maven Air Care  up 1406%
3. Mighty Dog Roofing  up 707%
4. Zoom Drain  up 422%
5. ATI Restoration  up 102%
6. The Cleaning Authority  up 55%
7. Budget Blinds  up 216%
8. Ace Handyman  up 30%
9. Richard’s Painting  up 125%
10. ForeverLawn  up 55%

Yelp Reports All-Time High in New Business Openings

Fire Tested

Back to the point about flat growth for all categories except home services, that’s not necessarily a bad thing. Matching last year’s level of new business openings is a strong signal, given the robust numbers seen then. And beyond the sheer number of business openings, there are qualitative factors at play.

Specifically, businesses opening in the current environment are fire-tested. In other words, any business opening during or since the pandemic has its work cut out for it. This includes dealing with Covid and non-Covid headwinds including volatility in closures, mandates, inflation, and the great resignation.

Speculating a bit, these factors mean that the new crop of businesses reflected in the above data could possess a greater degree of operational and digital marketing acumen than seen in the past. This Darwinian dynamic could in turn raise the bar in terms of competitive skill sets for SMB survival.

Altogether there’s a new face of the American SMB. It’s savvier and more digitally native than its forbearers. The latter is partly a function of proprietor age, as it advances in the turnover cycle of new businesses. We’ll continue to track these trends on macro and micro levels to see how they play out.