Home remodeling spending is expected to stay positive through early 2027, but growth will slow sharply to a rate below overall inflation, according to new data from Harvard University's Joint Center for Housing Studies. The projection signals a notable cooldown after years of robust activity in the home improvement sector.
The slowdown is likely to be felt across major renovations, including kitchen and bathroom remodels, as well as larger projects such as room additions and window replacements. Homeowners facing higher costs for materials and labor are increasingly cautious about committing to expensive upgrades.
Rising mortgage rates and elevated borrowing costs for home equity loans and lines of credit are squeezing household budgets, making it harder for owners to finance major remodeling projects. The high cost of moving to a new home is also trapping many in place, which typically drives remodeling demand.
With less competitive pressure to renovate, contractors may see longer lead times and softening demand. The market is shifting from a sellers' environment for renovation services toward one where homeowners have more bargaining power on pricing and project timing.
Despite the deceleration, the center noted that total spending on home improvements remains elevated relative to pre-pandemic levels. Some analysts caution that if the economy weakens further, remodeling growth could turn negative sooner than currently projected.