By early 2027, annual spending growth on home improvements is projected to plummet to just 0.5%, a stark contrast to recent boom years. The projected plummet of annual spending growth on home improvements to just 0.5% signals a significant shift from the robust growth seen previously, impacting market expectations for home remodeling in 2026 and beyond, according to Realtor and Qualified Remodeler.
Overall home remodeling growth is projected to slow sharply, but high-end projects and long-term homeowner commitment are maintaining a substantial, albeit more selective, market. This creates a complex environment for firms navigating the slowdown in home improvement spending.
The home remodeling industry appears poised for a significant market segmentation, where broad-based growth gives way to a more specialized, value-driven landscape, potentially leaving less adaptable firms vulnerable.
What We Know About Home Remodeling Trends
- Year-over-year growth in home renovation and repair spending is projected to be 0.5% by the first quarter of 2027, according to Realtor and Qualified Remodeler.
- Homeowners are hesitant to undertake large expenses like home remodels due to concerns about the economy, reports Realtor.
- The intended median spending on home renovations is declining in 2026, notes Kitchen & Bath Design News.
- High-end remodeling activity gained momentum in 2025, with the top 10% of projects reaching $150,000 or more, up from $140,000 in the prior year, according to Kitchenbathdesign.
Economic Headwinds Create a Bifurcated Market
Homeowners are hesitant to undertake large expenses like home remodels due to concerns about the economy, according to remodeling spending expected to slow sharply as homeowners remain wary of economy. This economic caution directly impacts discretionary spending, leading to a projected decline in the intended median spending on home renovations in 2026, as noted by ‘more measured approach’ seen to remodeling in 2026.
Conversely, high-end remodeling activity gained momentum in 2025. The top 10% of projects reached $150,000 or more, an increase from $140,000 in the prior year, according to Kitchenbathdesign. This suggests a widening gap between budget-conscious homeowners pulling back and affluent homeowners continuing to invest in high-value projects, driven by differing economic sensitivities.
Companies relying on broad-market discretionary remodels face a strategic imperative. They must either pivot towards high-end luxury or specialize in essential home modifications like aging-in-place. The traditional middle market for home improvements is effectively dissolving under economic pressure, forcing a re-evaluation of business models.
Long-Term Trends vs. Short-Term Hesitation
Nearly two-thirds of homeowners (61%) plan to stay in their homes for 11 years or more, reports Kitchenbathdesign. This long-term commitment suggests homeowners are adapting existing properties rather than moving. Such a trend creates a foundational demand for home modifications, even as discretionary spending slows.
This underlying stability in homeowner residency provides a buffer against short-term economic anxieties. It means essential and needs-based improvements will likely continue, contrasting with the slowdown in aspirational, discretionary remodels. Homeowners prioritize maintaining and adapting their primary assets for longer stays.
Future Outlook: Measured Growth and Niche Opportunities
Residential remodeling activity is expected to increase 3% in 2026 and an additional 2% in 2027 in inflation-adjusted terms, according to SupplyHT. This contrasts with the 0.5% nominal growth projected by Jchs Harvard for early 2027. inflation-adjusted terms, according to SupplyHT. This contrasts with the 0.5% nominal growth projected by Jchs Harvard for early 2027. This disconnect means that while the volume of 'activity' may increase, contractors will struggle with profitability as rising input costs outpace what homeowners are willing or able to spend, forcing a re-evaluation of pricing and project scope.
A significant 56% of remodelers are involved in home modification work relating to aging-in-place, reports SupplyHT. A significant 56% of remodelers involved in home modification work relating to aging-in-place highlights a quiet but robust segment driven by demographic necessity rather than discretionary spending or market cycles. The market will likely see a shift towards more deliberate planning, smaller projects, and specialized services like aging-in-place, even as inflation-adjusted growth continues at a slower pace.
What is the forecast for the home remodeling market in 2026?
The home remodeling market in 2026 is projected to see a sharp slowdown in nominal spending growth, reaching 0.5% by early 2027, according to JCHS Harvard. Total improvement and repair expenditures are still expected to reach $523 billion in early 2027, indicating a substantial market size despite the decelerated growth.
How will economic conditions affect home renovations in 2026?
Economic conditions are causing homeowners to hesitate on large remodeling expenses, leading to declining median spending on renovations. This creates a market bifurcation, with resilient high-end projects and a slowdown in mid-range discretionary work. Home improvement spending share increased from 33% in 2007 to 44% in the first quarter of 2025, suggesting a long-term commitment to home investment despite short-term economic concerns, according to SupplyHT.
Are home improvement projects declining in 2026?
While nominal spending growth for home improvement projects is near stagnant, inflation-adjusted activity is projected to increase 3% in 2026 and an additional 2% in 2027, according to SupplyHT. This contrasts with the 0.5% nominal growth projected by Jchs Harvard for early 2027. Activity is expected to increase by 3% in 2026 and an additional 2% in 2027. The discrepancy between nominal spending growth and inflation-adjusted activity indicates that while the volume of work may rise, rising input costs absorb much of the perceived expansion. The number of remodeling firms has grown significantly, from 69,000 in 2000 to 128,000 at the start of 2025, according to SupplyHT, showing underlying industry capacity.
