What does the 2026 forecast look like for the home improvement industry? Based on early market indicators observed in the first quarter, the answer is a lot like 2025. Several of the economic drivers that were present last year have persisted in the first few months of 2026, from housing constraints and inflation concerns to questions about U.S. tariffs and trade policies.
The home improvement products market is fairly sensitive to the health of the housing sector, as well as to basic indicators of consumer demand such as real income and relative prices. The strength of the economic recovery over the next one to two years is subject to considerable uncertainty.
These are just a few of the market forces shaping homeowner behavior, demand patterns, and industry performance, and they can provide valuable insight for home improvement products manufacturers and retailers who are strategizing for the months and years ahead.
What is the State of the Home Improvement Buildings Products Market in 2026?
Even in a subdued housing market, home improvement spending remains near record levels, as repairs and replacements anchor demands—which means that this year may feel similar to last year for building products manufacturers and retailers. In light of several government shutdowns over the past year, ongoing conversation around tariffs, and other economic variables, it’s been a bit tumultuous, which affects the home improvement products market.
This led to more temperate growth in 2025, or 6.7% for the professional market, -1.7% for the consumer market, and 1.5% overall (which were down from previous forecasts), based on findings in HIRI’s U.S. Home Improvement Product Market Forecast.
Now, going into the second quarter of 2026, the forecast is 0.9% growth overall, with the professional market forecasted to experience negative growth, but the consumer market forecasting slight growth.
Our research indicates that DIY refreshes and essential replacements remain resilient, while discretionary, big-ticket projects face pressure. These were typically the projects that were postponed, canceled, or downsized last year, which is trend that is likely to persist in 2026. Building products manufacturers should expect the market to become even more competitive. It’s important to be hyper-focused on gaining market share in order to out-compete other brands.
What are the Forces Shaping the Market in 2026?
HIRI’s U.S. Home Improvement Products Market Forecast highlights several emerging trends that are impacting the home improvement industry, which Executive Director Dave King also explores and expands on in a HIRI webinar from February 2026. This research can provide industry stakeholders with practical insights designed to inform strategic planning, support business decision-making, and identify growth opportunities in a shifting market landscape. Here are some key insights from both the study and the webinar:
1. Building Products Categories are Growing Due to Inflation
Inflation did not rise as much as was generally expected over 2025, but tariffs caused progress on inflation to stall for much of the year. Based on data, HIRI's expectation is for inflation to remain elevated through 2026, based on the core personal consumption expenditure price index (core PCE). On a four-quarter basis, core PCE inflation is 2.8% by the fourth quarter of 2026, before falling to 2.4% by the end of 2027. This is down from a peak of 3.3% in the second quarter of 2026 in our November forecast but higher than the prior projection of 2.1% for the end of 2027.
This will have implications for the market. For example, in 2025, there were a few building product categories that increased by nominal and real-growth terms. These include:
- Soft-surface floor coverings
- Lawn and garden supplies
- Tools
- Paint
- Nursery supplies
- Other building materials
That means the overall market for these categories was growing, offering more opportunities to building products manufacturers through increased demand. Meanwhile, in 2025, many categories experienced inflationary growth, meaning there wasn’t necessarily more products leaving the shelves, but simply that products were becoming more expensive. In 2026, there’s another shift, with our forecasts showing that most categories, in fact, will only see growth through inflation. A few exceptions include:
- Gypsum and Specialty boards
- Dimensional lumber and boards
- Plywood and related products
The challenge for industry stakeholders will be determining how to continue being competitive and growing as costs are going up.
2. Mobility is Constrained in U.S. Housing Market
The housing industry is in the early stages of recovery, according to data from HIRI's market forecast. However, this is a rocky time for builders. Single-family housing permits, arguably the most important housing market leading indicator, fell 1.7% in December to an annual rate of 881,000; they totaled 909,600 in 2025, down from 981,900, and the lowest total since 2019. Existing home sales plunged 8.4% to 3.91 million at an annual rate in January (the lowest reading in 25 months), although this followed a 4.4% jump in December 2025.
Additionally, the National Association of Realtors’ survey found that 73% of homeowners are saying it’s a bad time to buy a house, which is notably high, and first-time buyer activity is at historic lows. In general, home-buying sentiment is negative, as prices have gone up and we’re witnessing high levels of equity. Plus, the 30-year fixed mortgage rate is hovering around 6% and is not likely to have a notable drop in 2026 or 2027 because of inflation-related pressure.
As a result, homeowners may have the desire to move or purchase a new residence, but they’re deferring and shifting their focus toward reinvestment into their existing space. They figure it is more cost effective to create the property they desire now, through renovations and upgrades, rather than selling their home and buying a new one.
3. Remodeling is Compensating for Lack of Mobility
The constraints of the housing market have implications for the building products market and home improvement industry. For example, it’s not uncommon for first-time home buyers to purchase their residence and then stock up on tools and equipment needed for upkeep. With fewer homes being bought and sold, this could negatively affect overall spend in certain product categories.
The question that manufacturers and retailers should ask themselves is, how reliant is my product category on new home buyers entering the market?
The answer may have implications for your business strategies and growth opportunities in 2026, as the housing market remains in a state of low mobility. In other words, designing strategies tailored toward a stay-driven homeowner, not a move-driven one.
4. Home Improvement has Stabilized at a Higher Baseline
Another indicator of the importance of the repairs and remodeling sector is that 2025 showed steady project participation with modest growth. Home improvement spending intentions held steady, positioned between projected necessities and flexible discretionary categories. In the fourth quarter of 2025, about 34% of homeowners said they planned to spend more on home improvement in the next 12 months, and only 19% were planning to spend less, a 6% decrease from the previous quarter based on HIRI's Quarterly Homeowner Activity Tracker, conducted in partnership with The Farnsworth Group.
This trend has been consistent over the past couple years, due in part to residual effects of the response to COVID-19. During those years, there was a notable shift in how homeowners viewed their place of residence and its role in personal health and well-being. We continue to see that in ways in which homeowners are valuing and investing in their houses. Looking forward to 2026, that continues to contribute to steady spending on home improvement activities and products.
5. Consumer Confidence Lags but Disposable Income is Growing
Consumer sentiment remains significantly below prior-year levels, despite stable employment and moderating inflation. Individuals are not feeling confident about their personal financial picture, which is the biggest driver of consumer sentiment. Based on HIRI’s research, the economy and inflation are consistently the top two economic concerns for consumers, with inflation worries increasing notably between the third and fourth quarter of 2025.
Disposable Income Shows Steady Growth YoY
However, consumer confidence is just one piece of the puzzle, and disposable income is actually the primary growth engine. Consumer sentiment has a shorter-term impact, whereas disposable income is a better gauge for home improvement spend. If people are making more, they’re likely to spend more. And the forecast for 2026-2029 is positive in this regard. Here is the outlook for real disposable income changes during this time period:
- +3.2% in 2026
- +2.7% in 2028
- +2.6% in 2029
- +2.5% in 2030
While persistently low sentiment and confidence make ongoing spending a heavier lift, this does not invalidate the premise that the consumer is currently muddling through. With consumer purchasing power actually improving, it is imperative for building products manufacturers and retailers to tether their growth perceptions and expectations to durable income strength, not fleeting confidence.
Contractors Show Considerable Optimism About Growth in 2026
Meanwhile, contractors are hungry for growth and seem optimistic about their future outlook. In fact, in the fourth quarter of 2025, about 60% of professionals reported that they expected the home improvement market to grow over the next 12 months, according to HIRI’s Quarterly Contractor Business Sentiment Tracker.
Additionally, about 65% anticipated revenue growth in that same period. For brands targeting this sector of the market and trying to capture their spending, the goal will be helping them save time, or enabling industry professionals to move faster, convert higher, and operate productively.
6. Higher-Income Households Disproportionately Drive Spend
Upper-income homeowners account for the largest share of improvement spend. For example, in terms of overall home improvement spending in 2023-2024, households making $149,000 or more accounted for 49% of the spend.
Additionally, households in this upper-income range are typically seeing improvement to their financial status year over year, as the wealth divide in the U.S. continues to widen, and they are confident their financial status will continue to be robust in 2026.
Whereas lower-income households are delaying or canceling projects as a result of financial pressures, middle-income households are doing more DIY activities than they might prefer to be doing. Meanwhile, upper-income households continue hiring professional contracts, and if they have to scale back on home improvements, it’s by way of altering the size of the project or downgrading types of materials—not deferring or aborting projects altogether.
For manufacturers and retailers, growth strategies must prioritize segments with financial capacity in order to be the most effective. It’s important to win in essentials and right-sized projects, not oversized discretionary bets.
7. Homeowner Demographics are Shifting, Along with Buying Power
Another notable market trend is that Gen X homeowners are occupying the center mass of home improvement spending. Additionally, Millennials are increasing their share of building product spend, while older cohorts gradually moderate. For example, over the past 10 years, the Boomers’ share of remodeling spend has continued to dwindle as a larger share of Millennials become homeowners.
Here is a closer look at home improvement spending by generation in 2023 (the year for which the most recent data is available):
- Silent Generation: 6% of spend
- Boomers: 38% of spend
- Gen X: 34% of spend
- Millennials: 22% of spend
- Gen Z: 1% of spend
As buying power shifts among generations, business and marketing strategies also must evolve to meet the demands, preferences, and priorities of each specific group.
Keeping Up to Date with the State of the Home Improvement Market
Whether you’re focused on forecasting, strategy, or staying informed on industry dynamics, HIRI’s data on the state of the U.S. Home Improvement Products Market provides a data-backed perspective that industry stakeholders can use to plan ahead with confidence. Become a HIRI member to gain access to the full report, as well as $1 million worth of research annually that will empower smarter decision-making across your organization, ensuring everyone from executives to marketing managers can stay aligned and adapt to market shifts with confidence.
