Last year, nearly 10 million homeowners came out from underwater on their mortgages, finally regaining some home equity. Along with the equity has come an increase in confidence in housing as an investment. That has helped more homeownership pull the trigger on a remodel, but they are, in general, still doing smaller, less expensive projects.

Read More Homeownership falls to 19-year low: Here's why

"You're still very nervous about overbuilding your neighborhood, putting more money in your house than you can get back if you're going to sell it," said Kermit Baker of Harvard's Joint Center for Housing and the American Institute of Architects. "So we're seeing for example not $125,000 kitchen remodels but $30-40-50,000 kitchen remodels."

Architects reported a jump in most sectors of remodeling in 2013, with additions and kitchen and bath renovations leading the surge. A survey by the firm Hanley Wood shows even minor kitchen and bathroom remodels recoup on average 82 and 73 percent of their values respectively in resale gains. Only projects by first-time home buyers, who are sorely under-represented in today's housing recovery, were weaker, as prices for both home and home renovations rose.

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