Housing market and economic weakness are starting to affect the home remodeling market as well.
Home Depot recently reported earnings that were below what the market and the company had anticipated.
“When we set guidance, we had anticipated that demand would begin to accelerate gradually in the back half of the year as interest rates and mortgage rates eased,” Chief Financial Officer Richard McPhail said in a CNBC interview. “But what we saw was that ongoing consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand.”
He added that consumers have been in a “deferral mindset” since 2023, with many waiting for lower interest rates before taking on major remodeling projects. The retailer had made similar arguments for a lower-than-expected financial performance earlier this year.
The economic softness is likely a contributing factor in the recent closure and bankruptcy filing of Newpro, a Woburn, Massachusetts-based home improvement company, with no stated reason and leaving many ongoing projects and outstanding orders in limbo.
Home Depot’s results and Newpro’s fate notwithstanding, home remodeling expenditures are expected to remain steady through the end of this year and into the middle of 2026, according to the Leading Indicator of Remodeling Activity (LIRA) by the Remodeling Futures Program at the Joint Center for Housing Studies (JCHS) of Harvard University. LIRA projects that year-over-year spending on home renovation and repair will rise by 2.4% in early 2026 before easing to 1.9% in the third quarter of next year.
“Upward trends in both remodeling permit activity and single-family home sales suggest that demand for home improvement will remain stable in the coming year,” said Rachel Bogardus Drew, Director of the Remodeling Futures Program at the Center. “Despite the modest pace, total homeowner remodeling spending is expected to reach $524 billion in early 2026, a new record high.”
JCHS said that the top drivers of remodeling projects are:
Aging homes: The national median age of owner-occupied homes increased to 39 years in 2017 — up from 32 years in 2007 and 29 years in 1997.
Aging homeowners: Older homeowners are increasingly seeking to improve the accessibility of their homes for the elderly or disabled. Nearly 3 million homeowners reported doing at least one accessibility-related home improvement project in 2017 — and more than 72% of them were age 55 or older.
Rising home prices: As home values have increased, so has home equity — meaning homeowners have more equity to tap to fund renovations.
Natural disasters: In 2017, 6% of home improvement spending went toward disaster repairs — up from 5.6% in 2007.
