Home Remodeling Spending Growth to Slow in Late 2026

The Leading Indicator of Remodeling Activity (LIRA) forecasts year-over-year growth in home renovation and repair spending of only 0.5% by the first quarter of 2027, signaling a near-halt for a major economic sector. A dramatic slowdown in home remodeling industry growth trends, despite substantial overall spending, indicates a challenging future for both homeowners and businesses. Rising interest rates and escalating construction costs are effectively freezing the market, pushing growth to a near-stagnation.

Total spending on home improvements is expected to reach over $520 billion by early 2027, but year-over-year growth in home renovation and repair spending is projected to slow dramatically. A tension is created where a massive economic entity faces near-zero growth, making it difficult for businesses to expand revenue through market growth. Companies and homeowners should anticipate a challenging market where high costs and reduced financing accessibility will curb discretionary spending and force a strategic re-evaluation of renovation priorities.

The shift from expansion to stagnation means homeowners will likely abandon significant projects, while remodeling firms must compete fiercely for a fixed pool of work. Understanding this outlook for 2026 and beyond is crucial for navigating the evolving home improvement market.

A $522 Billion Market Faces a Growth Slowdown

$522 billion — Total spending on home improvements and maintenance is expected to hit this figure by the end of 2026, according to Realtor.
2.1 percent — Year-over-year growth in home renovation and repair spending is projected to be this percentage in the middle of 2026, according to Jchs Harvard.

While the overall market remains robust in terms of absolute spending, the current growth rate is already modest, setting the stage for a more pronounced slowdown. The substantial market size, coupled with decelerating growth, indicates a significant challenge for an industry accustomed to expansion.

The Sharp Downshift in Spending Growth

Metric	Early 2026	Year-End 2026	Early 2027
Year-over-year Home Improvement Spending Growth	2.9%	1.6%	0.5%

Beyond borrowing costs, construction expenses have seen a persistent increase. Construction costs accounted for 66.4% of the average price of a new home in 2026, a notable rise from 60.8% in 2022, according to Realtor. The significant rise indicates that homeowners are facing a new, higher baseline for renovation expenses, making even modest projects financially daunting without substantial cash reserves. Higher borrowing costs and escalating material and labor expenses are directly impacting homeowners' ability and willingness to finance renovation projects, thus stifling demand. Home builders are responding to pockets of improving demand, but activity remains sensitive to interest-rate movements and construction costs, as stated by Kitchen & Bath Design News.