Remodelers Get Mixed Messages in Frozen Housing Market

Annual spending on home improvements and repairs is expected to stay flat through late 2027.

That’s 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. The report puts spending growth on renovation and repairs at 1.5% year over year by the third quarter.

The Joint Center noted that remodelers have always served two different markets, but the current state of housing is pulling them in 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. Second, homeowners tend to renovate when they are unable or don’t want to sell.

“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. “We expect annual spending to hover around $525 billion through the third quarter of next year.”

Housing Construction Indicators

The center noted that 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. It said that 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.

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, the Center noted.

“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.”

Improved Outlook

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

“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.”