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The starting numbers roughly agree. The forecasts do not, and neither says anything about how safe your devices are.

Smart Home Market Size and CAGR: Why the Estimates Disagree

Smart home market estimates for 2025 cluster near $140B to $162B, but growth forecasts run from 3% to 26% a year. Why, plus how to secure the devices you own.

10 min read

No federal statistical series that we could find measures smart home spending, so every market size you will read is a private research firm's estimate. For 2025 those estimates cluster fairly closely: Mordor Intelligence says $140.4 billion, Fortune Business Insights says $147.5 billion, and Precedence Research says $162.3 billion. The growth forecasts do not cluster at all. They run from about 13.7% a year (Mordor) to 21.4% (Fortune) to 26.2% (Precedence), and Statista's hardware-only forecast is just 3.0%. Compounded, those rates imply anything from roughly $185 billion in 2031 to $1.66 trillion in 2035. A forecast is an assumption about the future, not a measurement, and the useful question for a homeowner is less "how big is the market?" than "what am I connecting to my network, and who can see it?"

The earlier version of this article said the market would reach $154.4 billion in 2024 with a 10.67% CAGR through 2028, citing Statista. That forecast has since been superseded. Statista's smart home page, when we opened it in September 2026, showed $159.5 billion for 2026 and a 2.97% annual growth rate through 2031. The old article also listed regional CAGRs, segment CAGRs, a claim that Matter would add 20 to 30% to the market, and pandemic survey figures. None had a source we could open, so they have been removed.

Why the Estimates Conflict

Here is what each report we opened says it measures. The three 2025 starting points are within about 16% of one another, but the scope and the growth rates are not.

  • Statista defines the market as "the sale of networked hardware devices that enable home automation for private end users." It excludes software, subscriptions, services, and installation. It shows $159.5 billion in 2026 growing 2.97% a year to $184.6 billion in 2031.
  • Mordor Intelligence covers residential devices plus enabling software and services, and excludes commercial building automation, utility smart meters, and pure installation labor. It shows $140.42 billion in 2025, $164.13 billion in 2026, and $311.22 billion in 2031, a 13.65% CAGR.
  • Fortune Business Insights covers hardware, software platforms, connected services, and cloud management, for retrofit and new construction. It shows $147.52 billion in 2025 and $848.47 billion in 2034, a 21.40% CAGR from 2026.
  • Precedence Research covers lighting, security and access control, HVAC, entertainment, speakers, home healthcare, kitchen, appliances, and furniture. It shows $162.27 billion in 2025 and $1,661.50 billion in 2035, a 26.19% CAGR.

Four things account for most of the disagreement:

  1. What counts as smart. Hardware only, hardware plus subscriptions, or the whole category including appliances, furniture, and healthcare devices. The last is much broader than most people mean by "smart home."
  2. Compounding. A small difference in growth rate becomes enormous after ten years. At 26% a year, the market multiplies about tenfold. At 3% a year, it barely moves. The base year matters much less than the rate.
  3. Geography. Most estimates are global, while some published "US" or "North America" versions exist. Read the label before you compare numbers.
  4. Undisclosed methods. These firms sell their methodology, so the sample, the currency treatment, and the segmentation cannot be checked. That is the same problem we found in the diffuser market estimates, and it is why we lean on government data where it exists, as in the pest control market guide. For smart homes, we found no such series.

We also looked for a citable Consumer Technology Association or Census Bureau figure for smart home sales specifically and did not find one, so we have not used one.

What Adoption Data Suggests

Ownership surveys are a better guide to real-world behavior than revenue forecasts, though they are also private. Parks Associates, a research firm, reported in August 2025 that 54 million US households own at least one smart home device, including about 13 million internet households that entered the market since 2020. The same release said 52% of device owners had experienced setup difficulties, and that the firm surveys about 10,000 internet households each quarter. The release does not define exactly what counts as a smart home device.

In a separate release, Parks said 47% of US internet households own a security solution and 35% have a paid security service, without disclosing sample size or methods. If you are weighing a monitored system, our guide to the private security market and alarm contracts covers what to ask before you sign.

What Matter Does and Does Not Solve

Matter is the compatibility standard from the Connectivity Standards Alliance (CSA). It runs over Wi-Fi and Thread, uses Bluetooth Low Energy for initial setup, and its multi-admin feature lets one device work with more than one platform, such as Alexa, Siri, or Google Assistant. Matter 1.5, released on November 20, 2025, added support for cameras, with local and remote access, along with closures such as garage doors and gates and new energy features.

Two limits are worth knowing:

  • Support is uneven. An independent Matter tracking site reported in January 2026 that many ecosystems were still at Matter 1.2 or 1.3, and that features vary by platform. Check that your hub or app supports what you want to buy.
  • Compatibility is not a security review. The CSA's announcements describe interoperability and local control. They do not promise that a device's app, cloud account, or software update support is secure, so those still need checking. We could not verify the old claim that Matter would expand the market by 20 to 30%.

The Part That Matters for Your Home: Privacy and Security

A connected device is a computer on your network, often with a camera or microphone, made by a company that may or may not keep it updated. Three sources show what can go wrong and what helps.

What has gone wrong

The FTC's 2023 action against Ring is the clearest example. The FTC alleged that Ring gave employees and contractors unrestricted access to customer videos, including videos from bedrooms and bathrooms, and did not implement multi-factor authentication until 2019 despite attacks in 2017 and 2018, leaving about 55,000 US customers compromised. Ring agreed to a $5.8 million refund payment, deletion of some early videos, and multi-factor authentication for employee and customer accounts. Those are allegations settled by an order, not a finding about every camera, but they show that a company's internal access rules and your account security both matter.

The Consumer Product Safety Commission has also weighed in on connected products. A 2019 CPSC staff status report said an internet-connected product can present a safety risk through its software updates, its connection, or its data. Its examples included a software update to a connected home security system that could inadvertently disable a smoke or carbon monoxide alarm without the homeowner's knowledge, and it said consumers need clarity on when a device might no longer be safe to use after software updates end. The staff also said they do not treat personal data protection and privacy alone as a consumer product hazard unless there is an associated risk of injury. That is a 2019 staff view, not a current rule, but it is a reason to test alarms according to the manufacturer's instructions and to confirm they still sound when Wi-Fi is off.

Steps that are backed by government or consumer guidance

  • Put smart devices on a guest network. CISA advises connecting IoT devices to a guest Wi-Fi network if internet access is all they need, which keeps them from discovering other devices on your network or reaching your router settings. See CISA's home Wi-Fi guidance.
  • Change default passwords. CISA says default router information may be publicly available, and recommends passwords that are long, random, and unique, never reused from other accounts.
  • Update the router and the devices. CISA notes that routine updates protect against known vulnerabilities, and recommends turning on automatic updates when available.
  • Use WPA3 Personal or WPA2 with AES, and disable remote management on the router unless you need it, per the same CISA guidance.
  • Ask whether a device needs to be online. CISA's archived IoT advice suggests evaluating whether a device needs a continuous internet connection and reviewing its security settings after updates.
  • Limit what devices share. A Consumer Reports segment reported by WRAL in September 2026 advised installing firmware updates, using a separate Wi-Fi network, reviewing privacy settings, and limiting data sharing to what a device needs to function.
  • Turn on multi-factor authentication for camera, doorbell, and smart lock accounts wherever it is offered.

Labels and standards

NIST published a consumer IoT baseline (NIST IR 8425) in September 2022, describing the cybersecurity capabilities consumer devices should have. The FCC's voluntary U.S. Cyber Trust Mark is meant to put a security label on qualifying devices. As of an April 2026 Cybersecurity Dive report, UL Solutions had withdrawn as lead administrator in December 2025 and the FCC had named the ioXt Alliance to take over. We could not confirm labeled products in stores, so do not assume a label will be on a box yet; check the FCC's site for current status.

What not to do

  • Do not leave a camera, lock, or hub on its default password or unpatched firmware.
  • Do not assume a smart smoke or carbon monoxide alarm is working just because the app says so. Test it as the manufacturer directs.
  • Do not put a camera in a bedroom or bathroom unless you are comfortable with the risk of that feed being accessed. That is a judgment call, but the Ring case involved exactly those rooms.
  • Do not buy a device without checking how long the manufacturer promises to provide updates.

If you use sensors that report humidity, the number is only useful if you know what to do with it, and our guide to suitable indoor humidity levels explains the targets.

Frequently Asked Questions

What is the smart home market size?

There is no official figure. For 2025, private estimates cluster from about $140 billion to $162 billion globally, with Statista's hardware-only measure at $159.5 billion for 2026. Each firm defines "smart home" differently.

What is the CAGR for the smart home market?

It depends on the firm. The reports we opened give 2.97% (Statista, hardware only), 13.65% (Mordor), 21.40% (Fortune Business Insights), and 26.19% (Precedence Research). Treat all of them as forecasts, and note how much the scope differs.

Why do smart home market reports disagree?

Scope, compounding, and undisclosed methods. Whether software, subscriptions, appliances, and installation are counted changes the starting number, and small differences in assumed growth rates change the endpoint enormously.

How many US homes have smart devices?

Parks Associates estimated 54 million US households owned at least one smart home device as of August 2025. That is a private survey, and the release does not define the term.

Does Matter make smart devices secure?

Matter improves compatibility and supports local control, but the CSA's announcements do not promise that a specific device's app, cloud account, or update support is secure. You still need to secure your network and accounts.

Are smart home cameras safe?

They can be safe enough, but the FTC's Ring case shows the risks of weak account security and broad employee access. Use multi-factor authentication, a unique password, current firmware, and a guest network, and think carefully about which rooms a camera can see.

Sources

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