A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and emerging opportunities for real estate investors, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Register to receive future editions, go straight to your inbox.
Home remodelers have always served two different markets, but the current housing situation is pulling in opposite directions. Initially, people tended to remodel when they moved, but high interest rates, high home prices and weak consumer sentiment have put the housing market in a deep freeze. Homeowners also tend to renovate when they can’t or don’t want to sell. So how will the remodeling market change?
Annual spending on home improvements and repairs will remain flat until the end of 2027, according to the latest Leading Indicator of Remodeling Activity (LIRA). from the Remodeling Futures Program at Harvard University’s Joint Center for Housing Studies. Put the growth of spending on renovation and repair at only 1.5% year-over-year by the third quarter.
“Retail spending on building products has been flat to negative, and remodeling permits have stagnated, which indicates sluggish renovation activity continues,” said Rachel Bogardus Drew, director of the future remodeling program at the Center, in a release. “We expect annual spending to hover around $525 billion through the third quarter of next year.”
The U.S. Census Bureau’s monthly reading of single-family home starts in September fell short of expectations, as did building permits, an indicator of future construction. Pending home sales, measured by signed contracts, also exceeded expectations, according to the National Association of Realtors.
“These active headwinds can slow growth in remodeling spending even more in the quarters ahead,” said Chris Herbert, managing director of the center in a release.
A separate October report from the National Association of Home Builders on sentiment among home remodelers was slightly more positive, but it also did not predict much growth in 2027.
“Remodeler sentiment remained stable in the third quarter, although remodelers in certain parts of the country continued to report problems with high material costs and finding enough labor to complete projects on time,” said Elliott Pike, chairman of the NAHB remodeling council and a remodeler from Homewood, Alabama. “Remodelers also report that the economic uncertainty makes some potential customers hesitate to proceed with the project.”
Finally, another October report from Houzz, an AI platform for construction and design professionals and homeowners, shows an improved outlook, with some caveats.
“Construction professionals closed 2026 with optimism, as expectations reached the highest level since the beginning of 2022 after recovering from a long slow activity. Design companies are more measured, although cautiously optimistic,” said Marine Sargsyan, head of economic research at Houzz. “Fuel costs remain a pressure point for most businesses, with some professionals passing it on to clients through higher prices and surcharges etc. eating into their margins.”