Key facts
- Demand for essential home repairs and maintenance remains resilient.
- Large discretionary renovation projects are under pressure.
- Economic uncertainty, high interest rates, and affordability issues are cited as key factors.
- Home Depot and Lowe's expect current demand levels to persist through 2026.
- Low housing turnover is limiting renovation spending tied to home sales.
- An aging housing stock provides a long-term tailwind for the remodeling sector.
Demand for essential home repairs and maintenance is holding steady, but large discretionary renovation projects are facing headwinds. Both The Home Depot and Lowe's reported during recent earnings calls that economic uncertainty, high interest rates, and affordability constraints are causing consumers to delay or scale back significant home improvement projects.
Executives at both companies indicated that this trend is likely to persist through the end of 2026. While the long-term outlook for the home improvement sector remains positive due to an aging housing stock and the potential for homeowners to renovate rather than move, the near-term is marked by caution. Lowe's noted that while their Pro customers' backlogs are steady, they are seeing a shift towards smaller, repair-focused projects rather than larger remodels.
Factors contributing to this slowdown include a significant drop in consumer sentiment, which has fallen considerably from a year ago. Additionally, low housing turnover due to the mortgage rate 'lock-in effect' is reducing the number of home sales, a traditional driver of renovation spending. Competitors have been aggressively discounting products, a strategy Lowe's has opted not to follow, believing it to be a temporary measure that erodes profitability.
Third-party research aligns with the companies' outlook. A report from Harvard University's Joint Center for Housing Studies projects that annual growth in remodeling spending will slow to approximately 0.5% by mid-2027, citing flattened permitting and retail spending on building products as indicators of cooling activity.