Frozen housing market sends remodelers mixed messages

Home remodelers have always served two different markets, but the current state of housing is now pulling them opposite directions. First, people tend to remodel when they move, 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 are unable or don't want to sell. So which way will the remodeling market shift?

Annual spending on home improvements and repairs is expected to remain relatively flat through late 2027, according to the latest Leading Indicator of Remodeling Activity (LIRA) from the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. It puts spending growth on renovation and repairs at just 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 points to continued sluggish renovation activity," said Rachel Bogardus Drew, director of the remodeling futures 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 read on single-family housing starts for September came in well below expectations, as did building permits, an indicator of future construction. Pending home sales, measured by signed contracts, also plunged beyond expectations, according to the National Association of Realtors.

"These ongoing headwinds could slow growth in remodeling spending even further in the quarters ahead," said Chris Herbert, managing director of the center in the release.

A separate October report from the National Association of Home Builders on sentiment among home remodelers was slightly more positive, but also did not forecast big growth in 2027.

"Remodeler sentiment remained stable in the third quarter, although remodelers in certain parts of the country continue to report issues with high material costs and finding enough labor to finish projects on time," said Elliott Pike, national chair of the NAHB remodelers council and a remodeler from Homewood, Alabama. "Remodelers also report that economic uncertainty is making some potential customers hesitant to move forward with projects."

Finally, another October report from Houzz, an AI platform for construction and design professionals and homeowners, showed an improved outlook, with some caveats.

"Construction pros are closing out 2026 with optimism, as expectations reach their highest level since early 2022 following a rebound from a long stretch of slow activity. Design firms are more measured, though cautiously optimistic," said Marine Sargsyan, head of economic research at Houzz. "Fuel costs remain a pressure point for most businesses, with some pros passing them on to clients through higher prices and surcharges and others absorbing them in their margins."