Annual spending on home renovations and repairs in the United States is projected to grow at a much slower pace through the first half of 2026, according to the latest Leading Indicator of Remodeling Activity (LIRA) from the Joint Center for Housing Studies at Harvard University. The LIRA predicts that expenditures for improvements and maintenance to owner-occupied homes will rise by only 1.2% year-over-year by the second quarter of 2026, marking a significant moderation compared to prior years of robust growth.
Several factors are contributing to this reduced growth expectation:
Weakened Housing Market: The current softness in the housing market is expected to put downward pressure on home improvement spending. Both construction starts and remodeling permit activity have decelerated, which serve as early indicators for future expenditures in this sector. Fewer home transactions generally translate to less remodeling activity since buyers and sellers typically invest in upgrades to prepare homes for sale or to personalize new properties.
Economic and Market Conditions: Ongoing economic volatility and uncertainty, including concerns such as rising interest rates and lower consumer confidence, may also dampen homeowner willingness or ability to invest in property upgrades. The light forecasted growth is a departure from the post-pandemic boom, when historically low interest rates, increased property values, and pandemic-driven nesting led to a surge in remodeling projects.
Policy Impacts: An exception to the slow growth may come in the short term due to pending federal cuts to incentives for home energy improvements. Industry leaders suggest that some homeowners may accelerate energy-efficiency projects to take advantage of existing rebates or credits before they are reduced or eliminated, causing a potential temporary spike in activity.
Long-Term Industry Outlook: The remodeling sector remains significant—annual homeowner remodeling expenditures are estimated at around $280 billion, accounting for almost 40% of all residential construction and over 2% of the entire U.S. economy. Factors like aging housing stock, elevated home equities, and ongoing supply constraints in the for-sale home inventory may help maintain modest demand for renovations even as overall growth slows.
Importance of Monitoring Trends: Experts at the Harvard Joint Center for Housing Studies emphasize that it is crucial to watch for any signs of a housing market rebound in the latter half of 2025; such a rebound could indicate whether the slowdown is merely a temporary dip or the beginning of a more significant downturn in remodeling activity.
LIRA Background: The LIRA is intended to provide a short-term national outlook for home improvement spending, measured as a projected annual rate of change for the current and subsequent four quarters. It aggregates a variety of economic and housing market indicators, aiming to identify future turning points in the home improvement cycle.
While the U.S. remodeling market is not projected to contract outright, homeowners, contractors, and suppliers alike should prepare for a period of subdued growth and heightened uncertainty, with only minimal increases in spending forecasted through at least mid-2026.
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