As you’re refining product development, marketing and distribution strategies for home improvement materials in the coming years, you need to evaluate what’s currently happening in the industry and where opportunities and challenges exist.

Economic uncertainty, rising materials costs, high mortgage rates, and confidence among homeowners and professionals are just some of the factors impacting the size of the home improvement market and spending trends throughout 2026 and beyond.

What is the Current Size of the Home Improvement Industry in the U.S.?

Based on data from the Home Improvement Research Institute (HIRI), included in our Construction and Remodeling: Industry Drivers and Forecast Report, the forecast for home improvement spending shows modest growth for consumers, but a substantial uptick in revenue from professionals over the next few years. The total home improvement market is projected to be roughly $689 billion by 2029, with homeowners contributing nearly two-thirds of spending and professionals contributing about one-third.

The Home Improvement Research Institute (HIRI) provides in-depth data on the size of market for individual building product categories, for both the consumer and professional sectors. Their data indicates that much of the perceived growth across categories is being driven by inflation. HIRI members have access to the full U.S. Size of the Home Improvement Products Market Forecast.

What are the Main Factors Driving Home Improvement Market Demand in 2026?

There are several factors that influence intent around home improvement activity and how much homeowners are planning (and will) spend for their projects in the coming years. Here are some insights into the current trends impacting the size of the home improvement market and demand for maintenance, remodeling and repairs:

1. Labor Supply May Constrain Home Improvement Industry

Labor participation—which measures how many able adults are involved in the workforce—declined heavily during the COVID-19 pandemic, according to data from the U.S. Bureau of Labor Statistics, included in our Construction and Remodeling: Industry Drivers and Forecast Report. We saw some recovery in the following years, with participation now seemingly stabilized, albeit below the necessary level. For the home improvement industry, the construction unemployment rate is highly seasons, but generally tracks with the national unemployment rate. As of mid-year, the industry unemployment rate was 4.1%, compared to a national unemployment rate of 4.3%. This gap further illustrates the tight supply of construction labor.

However, after several years of increasing job openings in the construction industry, there was a significant drop at the end of 2024 as the market began to soften. Job openings have once again begun to slightly increase over the past year, but haven’t returned to the same levels of mid-2021 to early 2024. As of May 2026, there was approximately 298,000 construction jobs open. Industry unemployment can serve as a leading indicator of construction activity and indicator of labor availability. For example, as industry unemployment increases, it is often correlated to a slowdown in production.

Another factor of labor constraints is our industry's reliance on foreign born labor, with roughly one-third being foreign born.  As fewer laborers enter the country, this may add increased pressure on labor, particularly once meaningful demand returns.  

2. Prices for Materials Remain High, with an Uncertain Future

The cost of construction materials can significantly impact the industry, both in terms of spending and project costs. Material costs and tariff pressures are considerably elevated in 2026. The Producer Price Index (PPI), put out by the Federal Reserve Economic Data (FRED, tracks changes in construction material costs, from raw materials to finished products. Some material costs have moved gradually higher over the past year, driven by recovering demand and ongoing tariff pressures. This includes iron and steel, lumber and wood products, and total commodities.

This continues to be a top concern for contractors, along with the general state of the economy, according to the Quarterly Contractor Activity Tracker for Q2 2026. More than half of professional contractors, builders, and remodelers cited concerns about products and materials, with cost being a concern for 74% of those with material challenges and availability being a challenge for 58% of them.

Additionally, according to our Quarterly Homeowner Activity Tracker, about 45% of homeowners also reported that the cost of their home improvement project was a challenge in Q2 206, up from 33% in the same quarter last year.

3. Geo-political Events are Contributing to Uncertainty and Price Volatility

Several major geo-political events have occurred over the past year and a half that have instigated additional social and economic uncertainty at both an industry and consumer level. First, the implementation of trade tariffs by the U.S. government, and the responding actions of trade partners, has created more uncertainty for building product manufacturers, suppliers, and customers. Secondly, the Iran War, started by the U.S. in February 2026, has contributed to the volatility as well. By pushing oil prices higher, it has become more costly transport raw materials, increasing the cost and causing delivery delays.

Consumers are paying for tariffs by settling for lower-quality goods or more expensive domestic alternatives that aren’t quite as good as their original preference.

How are Industry Professionals Responding to Materials Costs?

There is no single approach that builders and remodelers are using to respond to tariffs and increased materials costs. Home builders are primarily employing strategies such as:

• Stockpiling materials (47%)
• Increasing customer costs (37%)
• Using more suppliers (35%)

Commercial GCs and builders are typically:

• Increasing customer costs (42%)
• Stockpiling materials (40%)
• Including price escalation clauses in contracts (33%)

For residential GCs and remodelers, the main strategies are

• Stockpiling materials (35%)
• Making no plans to change any operations (29%)
• Including price escalation clauses in contracts (28%)

Product brands and suppliers should continue expecting some level of volatility when it comes to materials and strategically plan for both worst- and best-case scenarios.

4. Household Mobility is Declining

Household mobility fell to a record low of roughly 11% of the total population, or 14.8 million households, in 2024 (the most recent year for which data is available), according to the U.S. Census Bureau’s American Community Survey (ACS).

This is significant because movers spend more on home improvement to fix up their property before they sell it and also remodel a space after they buy it. For example, according to findings shared in our Construction and Remodeling: Industry Drivers and Forecast Report 53% of movers make improvements to their previous home and 84% renovate within the first year of getting into their current home. First-time buyers are even more active than repeat homebuyers. Less mobility means fewer movers and less transaction-triggered spending across the entire channel.

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5. Existing Home Inventory Remains Low

Increased costs, increased interest rates, and limited capacity for homebuilders have resulted in above-healthy levels of new home inventory that must be cleared out. This is also deferring new single-family (SF) starts. On the flip side, the existing home supply remains low (or a 4.5 months’ supply, compared to a healthy supply of 6 months).

Home builders are working to reduce inventory by offering rate buy-downs and discounts. As a result, the prices of new homes are now comparable to, and in some cases lower than, those of existing homes—an unusual situation that boosts demand for new construction. Meanwhile, with limited inventory of existing homes, prices remain elevated, keeping equity high, and homeowners in place. Additionally, the low number of new SF housing starts means that existing homes will continue to age, leading to increased demand for repairs and renovations as materials and products deteriorate.

Responding the Aging Housing Stock in the U.S.

Considering the fact that the housing stock is aging—the median age of owner-occupied homes is currently 44 years, compared to 31 years in 2005—there will be continued demand for repairs and maintenance improvements in the coming years. In terms of existing inventory, national home values remain strong, which drives home equity, indicating significant financial leverage for existing homeowners. This purchasing power often translates into renovating or upgrading homes.

6. Lock-in Effect is Loosening but Continues to Linger

Demand for housing exists, but it is currently being constrained by uncertainty. Because of higher interest rates, high home values, and high material prices, we’ve witnessed a “lock-in effect” within the housing market. Homeowners are hesitant to move until conditions improve and they can see the value in moving. Both 30-year fixed-rate mortgages and the annual average Federal Reserve prime loan rate are still elevated at roughly 6.66% and 6.75%, respectively, according to data from FRED.

As of the end of 2025, 52% of homeowners with mortgages had interest rates below 4% (down from 65% in 2022, which reveals a decline). With rates and home values holding strong, many homeowners have incentive to stay put. However, an estimated 30-35% of homeowners are without a mortgage, which represents a large pool of equity. While the rise of housing inventory in the U.S. suggests the lock-in effect is beginning to loosen, many buyers are hesitant to make a move until affordability improves dramatically.

Housing Affordability Leads to Weakened Pool of Home Buyers

Based on the National Association of Realtors’ Housing Affordability Index (HAI), affordability deteriorated sharply through 2023 and early 2024 as a result of higher mortgage rates and elevated home prices overwhelming income growth. Affordability improved modestly through mid- to late 2025, as incomes increased and rates eased, but conditions remain weak by historical standards. Now, halfway through 2026, mortgage rates are the highest seen in over a year, while home values remain elevated and income growth is not keeping pace with inflaction. This continues to limit the pool of qualified buyers in the housing market.  

7. Consumer Confidence Trending Down

Data shows that consumer confidence has been slowly declining since the end of 2024. History tells us that increased consumer uncertainty, which is often reflected in consumer confidence, delays increased consumer spending on home improvement and larger discretionary projects. According to the University of Michigan’s Consumer Sentiment Index, which details consumer attitudes and buying intentions, consumer confidence has dropped to its lowest level in its history (since 1978). We may see uncertainty and pessimism remain for the second half of 2026 and into 2027, which puts pressure on industry stakeholders to meet growth goals.

Additionally, based on data in our Quarterly Homeowner Activity Tracker, sentiment around starting a new home improvement project remains relatively low. The percentage of homeowners who think it is a good time to start a home improvement project is:

• 32% for projects $5K and under (compared to 39% in Q2 2025)
• 20% for projects $5K to $25K (compared to 28% in Q2 2025)
• 13% for projects $25K or more (compared to 21% in Q2 2025)

Additionally, 17% of homeowners feel it’s a good time to hire a contractor, compared to 25% in Q2 2025.

Industry Professionals Express More Positive Sentiment

‍Existing home contractors however are more optimistic. Based on data in our Quarterly Contractor Activity Tracker for Q2 2026, 57% of contractors expect the home improvement market to grow in the next 12 months. Approximately 59% anticipate positive growth in their firm’s revenue over the next year. Contractors are almost evenly split on their sentiment about whether there is now more competition in the market compared to a year ago. However, homeowner challenges and confidence are likely to impact pro behaviors as they respond to the needs of their homeowner customers.‍

8. Remodeling and Repairs Sector Continues to be Resilient

Historically, remodeling tends to be less volatile than new home construction, and we anticipate this trend to continue, although growth in the remodeling sector is projected to lose momentum by late 2026. According to data from the Joint Center for Housing Studies (JCHS), included in our Construction and Remodeling: Industry Drivers and Forecast Report, year-over-year growth in the remodeling industry is expected to ease from nearly 3% early in the year to about 1.6% by year end, reflecting a stabilizing but still constrained housing market. Despite late-year slowdown, total homeowner spending on improvements is projected to reach $522 billion by the end of 2026.

What Factors Support Demand for Repairs and Remodeling?

In a recent Shop Talk with The Farnsworth Group President Grant Farnsworth and Danushka Nanayakkara, Assistant Vice President for Forecasting at the National Association of Home Builders (NAHB), they discussed several long-term trends that continue to support demand for repairs and remodeling. These include:

• An aging housing stock
• Record homeowner equity
• Historically low mobility rates
• Older homeowners choosing to age in place
• Strong spending among Baby Boomers

Many projects are being deferred rather than abandoned altogether, and this distinction matters. Economic uncertainty may influence timing, but it has not eliminated demand.

For manufacturers serving professional contractors, remodelers, and the existing-home market, this remains one of the most compelling opportunities in the industry.

9. Planned Spending on Home Improvement Projects Inches Up

Planned home improvement spending for the next 12 months is up across all project categories, based on data in our Quarterly Homeowner Activity Tracker. The most notable increases were for:

• Exterior envelope (increasing from a planned spend of $1,905 in Q1 to $2,608 in Q2)
• Yard, garden and outdoor (increasing from a planned spend of $881 in Q1 to $1,549 in Q2)

However, more homeowners were sidelined from planning projects in Q2, particularly in the yard, garden, and outdoor category. That means a smaller group of homeowners are planning projects, but they are also intending to spend more. Homeowner intent around exterior envelope and mechanical/systems projects held firm in Q2 2026.

Industry stakeholders must be prepared for a certain level of uncertainty. Budget-sensitive homeowners are making tradeoffs when it comes to where and how they spend. Contractors, suppliers, and manufacturing brands must respond accordingly by offering a breadth of prices and value propositions to accommodate a range of needs. Homeowners must feel comfortable and confident about decisions and that what they’re investing into home improvement is worth it.

Conducting Custom Market Size Research to Inform Business Strategies

While general insights in the home improvement market are helpful, it’s important to have specific data in order to define opportunities for acquisition, distribution or revenue and strategize accordingly. The Farnsworth Group provides customized market research specifically within the home improvement, building products, and lawn and garden industries. Utilize this direct feedback from end-users and suppliers to give you the detailed information and insights you need. ‍‍