Key facts
- The NAHB Remodeling Market Index (RMI) was 61 in Q2 2026, down one point from Q1.
- Remodeling demand is supported by mortgage rate lock-in, record home equity, and low housing inventory.
- Sentiment for small and medium-sized remodeling projects remains strong, while large projects show a decline.
- Material costs increased by an average of 6.7% for 74% of remodelers due to higher fuel costs.
- NAHB forecasts continued robust remodeling spending.
Remodeling contractors maintained optimism in the second quarter of 2026, with the National Association of Home Builders' (NAHB) Remodeling Market Index (RMI) at 61. This figure, while down one point from the previous quarter, remains solidly above the 50 break-even level and outperforms sentiment in new construction sectors.
NAHB economists attribute the remodeling market's resilience to several factors, including mortgage rate lock-in, which discourages homeowners from moving due to higher current rates compared to their existing mortgages. Record home equity provides homeowners with the financial capacity to fund renovation projects. Additionally, limited inventory in the for-sale housing market pushes demand towards improving existing homes.
The RMI's Current Conditions Index held steady at 70. Sentiment for moderately sized projects, ranging from $20,000 to $49,999, rose to 73, while sentiment for small projects (under $20,000) remained strong at 74. However, sentiment for larger projects ($50,000 and above) declined to 64, indicating a preference for smaller, more manageable renovations in an uncertain economic climate.
The Future Indicators Index, which tracks remodelers' views on leads and backlogs, slipped to 52. While this suggests demand is easing from pandemic-era peaks, it still indicates a sustainable pipeline of work. Cost pressures, particularly from rising material prices attributed to higher fuel costs, are impacting project timing and profitability. Approximately 74% of remodelers reported material price increases averaging 6.7% since March.
NAHB forecasts that remodeling spending will remain robust in both the short and long term, offering a counter-cyclical hedge for builders facing slower new-home sales. The data suggests a strategic shift towards smaller and mid-range projects, emphasizing the need for firms to manage procurement, pricing, and labor allocation accordingly.