Harvard Forecast Sees U.S. Remodeling Spending Flat Through Late 2027

The center’s Leading Indicator of Remodeling Activity forecast annual spending growth of just 1.5% year over year by the third quarter, with annual spending hovering around $525 billion through the third quarter of next year. Rachel Bogardus Drew, director of the remodeling futures program at the center, said retail spending on building products has been flat to negative and remodeling permits have stagnated, pointing to continued sluggish renovation activity.

The forecast follows September Census Bureau data showing single-family housing starts and building permits well below expectations, CNBC reported. Pending home sales, measured by signed contracts, also fell more than expected, according to the National Association of Realtors. Chris Herbert, managing director of the center, said those headwinds could slow remodeling spending growth further in the coming quarters.

Home remodelers serve two markets that are now moving in opposite directions. People tend to remodel when they move, but high interest rates, high home prices and weak consumer sentiment have put the housing market in a deep freeze. Homeowners also tend to renovate when they are unable or do not want to sell. The Harvard forecast covers both types of demand and still points to only modest growth.

A separate October report from the National Association of Home Builders on sentiment among home remodelers was slightly more positive but did not forecast big growth in 2027. Elliott Pike, national chair of the NAHB remodelers council and a remodeler from Homewood, Alabama, said remodeler sentiment remained stable in the third quarter, although remodelers in certain parts of the country continued to report high material costs and difficulty finding enough labor to finish projects on time. Economic uncertainty is also making some potential customers hesitant to move forward with projects, he said.

Houzz, an AI platform for construction and design professionals and homeowners, showed an improved outlook in another October report, with some caveats. Marine Sargsyan, head of economic research at Houzz, said construction pros are closing out 2026 with optimism as expectations reached their highest level since early 2022 following a rebound from a long stretch of slow activity. Design firms are more measured but cautiously optimistic, she said. Fuel costs remain a pressure point for most businesses, with some passing them on to clients through higher prices and surcharges and others absorbing them in their margins.

Editor's Summary

Harvard’s LIRA forecast points to flat U.S. remodeling spending near $525 billion through the third quarter of 2027, with growth of just 1.5%. Weaker housing starts, permits and pending sales add pressure, while NAHB and Houzz reports show stable-to-improving sentiment alongside cost and labor concerns.