U.S. remodeling market signals subdued spending growth through 2027

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U.S. remodeling market outlook

Highlights

Harvard's Joint Center for Housing Studies forecasts annual U.S. home improvement spending growth at only 1.5% year over year by Q3 2027, hovering near $525 billion.
Latest data shows U.S. single-family housing starts and building permits fell below expectations in September, while pending home sales dropped sharply, signaling weak broader housing demand.
Industry sentiment remains stable despite elevated material and labor costs, but ongoing economic uncertainty and fuel price pressures contribute to subdued remodeling sector growth expectations through 2027.

Harvard outlook points to slow demand

As reported by CNBC, citing the Joint Center for Housing Studies of Harvard University, annual spending on home improvements and repairs is expected to remain relatively flat through late 2027 under its latest Leading Indicator of Remodeling Activity. The outlook puts spending growth on renovation and repairs at 1.5% year over year by the third quarter.

Rachel Bogardus Drew, director of the remodeling futures program at the center, says retail spending on building products has been flat to negative and remodeling permits have stagnated, signaling continued sluggish renovation activity. She says annual spending is expected to hover around $525 billion through the third quarter of next year.

Broader housing indicators also remain weak. The U.S. Census Bureau's monthly reading on single-family housing starts for September comes in well below expectations, while building permits, a gauge of future construction, also disappoint and pending home sales fall sharply, according to the National Association of Realtors.

Chris Herbert, managing director of the center, says those continuing headwinds could slow growth in remodeling spending even further in the coming quarters.

Industry surveys show uneven sentiment

A separate October report from the National Association of Home Builders offers a slightly more positive view of sentiment among home remodelers, but it also does not point to significant growth in 2027. Elliott Pike, national chair of the NAHB Remodelers Council, says sentiment remains stable in the third quarter even as some remodelers continue to face high material costs and labor shortages that make it harder to complete projects on time.

Pike adds that economic uncertainty is making some potential customers more hesitant to move ahead with renovation plans. That suggests the sector is still balancing two opposing forces, weaker home sales that reduce move-related remodeling work and elevated housing costs that keep some owners in place and more likely to upgrade existing homes.

Houzz reports a more improved outlook in October, saying construction professionals are ending 2026 with optimism after a rebound from a prolonged period of slow activity. But the platform says design firms remain more cautious, while fuel costs continue to pressure businesses, with some passing those costs on to clients through higher prices and surcharges and others absorbing them in margins.

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