Mary is sleeping in the living room while we redecorate her room.
Why is the present simple "redecorate" used? Present simple is used when there's something permanent, but they don't want to redecorate her bedroom forever.
The present continuous can be used to indicate that an action is ongoing/unfinished, but also to indicate that it's temporary, which is the case here.
Just as "Mary is sleeping in the living room" doesn't mean she's asleep right now, "we redecorate her room" doesn't mean "we always/permanently redecorate her room".
So, "Mary is sleeping …" refers to a temporary situation, not an unfinished one, and "we redecorate …" is just another standard condition clause, like "until I get home". It doesn't need to be continuous because whether or not either action is ongoing is not relevant to what is being said.
You could use "while we're redecorating …", as others have mentioned, but it wouldn't add anything because the present continuous is being used to express that "is sleeping in the living room" is a temporary situation, not an ongoing action (i.e. she isn't asleep right now).
I can't think of any context where there's even a nuance of difference in the meaning of OP's example if it uses the present progressive while we are redecorating her room.
On stylistic grounds I'd use present simple, if only to avoid the slight clumsiness of repeating a relatively unusual verb form twice in one utterance. But someone else might say doing this gives the sentence a certain "symmetry/internal consistency". It's six of one, half a dozen of the other.
However, there is a potential difference if we reverse the verb forms...
Again, I don't think the stylistic choice of we are redecorating/we redecorate makes any difference. But present simple in the first position strongly implies the scenario being described is a regular occurrence (we redecorate Mary's room every couple of years, and whenever we do, she sleeps in the living room until we're finished).
Nor is the redecorate verb form affected by casting everything in the future (Mary will sleep/be sleeping in the living room...).
The present progressive construction, while we are redecorating her room, would also be possible here. However, the present tense is used because the length of time the redecorating will take, while not endless, is considered to be of uncertain duration.
EDIT: In view of the downvote and the comments, here’s an alternative, and possibly better, explanation. Mary is sleeping in the living room while we are redecorating her room strongly suggests that the redecorating has already begun. Mary is sleeping in the living room while we redecorate her room allows the possibility that it hasn’t.
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