Homeowners are feeling pressure on a variety of fronts in 2026. Inflation has increased the cost of living, with rising gas, housing, energy, and food prices making day to day living more challenging. These financial pressures are also present in the home improvement arena—and growing more prominent.
U.S. households are searching for areas to cut back, which is leading to planned decreases in home improvement spending, as well as increasingly more project cancellations and delays. The challenge for stakeholders in the home improvement industry, including contracting firms and manufacturers, is meeting homeowners where they’re at.
In light of broader macroeconomic trends, it’s critical to find opportunities to keep projects moving forward. Financing, for example, expands what homeowners can afford to do, not just how they pay for already-planned work, based on data from the Home Improvement Research Institute’s (HIRI) recent Home Improvement Financing Insights report. Using data from the second quarter of 2026, this report tracks shift in home improvement spending intent over time, compares homeowners who use financing against those who don’t, and digs into the main drivers for project postponements and cancellations.
Planned homeowner spend is one important indicator of the health of the home improvement market. In Q2 2026, home improvement spend intent turned net-negative, the first negative reading in at least nine quarters. A net-negative reading means more households are planning to spend less on home improvement activities in the next 12 months than are planning to spend more (or 30% and 27%, respectively). About 43% plan to spend the same. These findings come from HIRI’s Quarterly U.S. Homeowner Project Activity Tracker, conducted in partnership with The Farnsworth Group, that is included in the financing insights study.
This is a noteworthy change from previous sentiment, with prior HIRI data showing positive readings across the prior nine quarters. It indicates the financial strain that many homeowners in the U.S. are currently feeling in 2026.
When it comes to the main categories of household spending, the intent around home improvement spending sits between protected essentials and clearly pressured discretionary spending. For example, the categories where homeowners plan to spend more over the next 12 months include:
Meanwhile, categories such as hobbies, vacation, and dining and entertainment have a much higher net-negative sentiment, based on data from Q2 2026. Homeowners have accepted inflated prices for necessities and are planning to cut back on discretionary spending over the next 12 months. Now, home improvement has fallen into the latter category. This trend doesn’t necessarily denote a crisis in the industry, but it does serve as an indication of where homeowners' priorities lie and how they're adjusting the macroeconomic pressures. The silver lining is that home improvement is at the top of people's lists when it comes to discretionary spending, which suggests there is opportunity for manufacturers and suppliers to respond to the challenges that homeowners are facing to help them pursue the improvement activities they desire.
Another indicator of market health is project cancellations and delays, both of which have increased over the past year. Project cancellations experienced a roughly 67% increase from 2024 to 2025, whereas delayed projects increased slightly, from approximately 27.9% in 2024 to 29% in 2025. Based on data from the Quarterly Homeowner Project Activity Report, postponement and cancellation rates have held steady at elevated levels in the first two quarters of 2026 (the most up to date tracking available). For example, 32% of projects were postponed in both the first and second quarter of 2026, while between 5% and 6% of projects were canceled.
The main reasons for cancelled and postponed projects in Q2 2026 include:
In general, budget and financial reasons led as the main driver of postponements and cancellations in every quarter from Q2 2025 to Q2 2026. Additionally, high interest rates are having a negative impact on project home improvement activity, delaying about one-third of projects.
Speaking of financing, how homeowners pay for their home improvement projects also varies significantly across income brackets and net worth and provides further insight into how financing factors into the bigger picture of home improvement activity.
The households with incomes in the $150K to $499K range most frequently pay cash for their projects, whereas homeowners in the $50K to $149K range use cash for 40% of projects and those making under $50K use it for approximately 34% of projects. Other common payment methods include:
For homeowners under $150K in net worth, Home Equity Line of Credit (HELOC) and mortgage refinance options either stay flat or dip lower in terms of their use. This is generally because those homeowners lack the home equity to qualify for those types of financing options. At the same time, about 64% of them cite budget as the reason they have not started a project, despite wanting to.
Despite rising project costs in 2026, there hasn't been a significant increase in homeowners using financing as an alternative payment method, as might be expected. Instead, homeowners under $150K in net worth lean on credit card use, even though it's a more costly option. For example, homeowners in both the $50K to $149K range and the under $50K range use credit cards for 32% of projects. This demographic represents an opportunity for expanding financial services, especially those that are more cost-effective than high-interest credit cards, to help them feel empowered to take on projects that they want to do but currently view as unaffordable.
Heading into the final months of 2026, and looking ahead to 2027, there are numerous macroeconomic trends influencing the home improvement market, from high interest rates to inflation and increased cost of living. As financial pressures and affordability lead to delayed and postponed projects, financing provides a unique opportunity for home improvement brands to help homeowners keep their much-desired activities moving forward. Product pricing is also an important consideration to maintain market share in the currently tight market.
Costs are hindering many home improvement projects, so a well-structured financial product could entice homeowners who are ready to spend but need to find the right financial offer. Financing that removes the budget barrier before a homeowner walks away from their project can help address one of the key drivers of overall project cancellations and delays. Financing messaging and product design also should center on affordability as a way to maintain projects. This is the lever homeowners have named most often and consistently when discussing challenges and deterrents to home improvement activity.
Financing expands what a homeowner thinks they can afford to do, not just how they pay for already-planned work. It also appears to help contractors land bigger jobs, although it does not affect their project volume or help them win a higher share of bids.
For more detailed data into how home improvement financing shapes homeowner and contractor behavior, download HIRI’s Home Improvement Financing Insights report. This study, which is free for HIRI members, examines where financing use is concentrated, where it lags behind project value, how it relates to project size, and impacts contractor revenue growth. HIRI members can use these findings to identify which homeowner segments, product categories, and contractor partners represent the clearest opportunity for a financing product.
Beyond these findings, members gain access to more than $1 million in other timely home improvement market research and industry analysis each year, along with expert support to help put the data into context and apply it within their organizations.
Not yet a HIRI member? Schedule a consultation with Dave King to explore how HIRI research can support your market planning, forecasting, and strategic decision-making.
In Q2 2026, home improvement spend intent turned net-negative for the first time in at least nine quarters. According to HIRI's Quarterly U.S. Homeowner Project Activity Tracker, 30% of households plan to spend less on home improvement over the next 12 months, 27% plan to spend more, and 43% plan to spend the same.
Home improvement falls in the middle. Homeowners plan to spend more on essentials like groceries, healthcare and transportation, while hobbies, vacations and dining out show much steeper planned cuts. Home improvement still sits at the top of discretionary spending, which leaves room for brands that help homeowners keep projects going.
Budget and financial concerns are the top reason, cited for 69% of postponed or canceled projects in Q2 2026. Labor costs (32%) and scheduling or timing (17%) come next. High interest rates are also delaying about one-third of projects. In each of the first two quarters of 2026, 32% of projects were postponed and 5% to 6% were canceled.
Cash is the most common payment method, especially for higher-income households. Homeowners under $150K lean heavily on credit cards (32% of projects) and use HELOCs and refinancing less, often because they don't have enough home equity to qualify. Other methods include personal loans, contractor financing, insurance and help from family or friends.
HIRI's Home Improvement Financing Insights report finds that financing expands what homeowners believe they can afford, not just how they pay for work they'd already planned. It also helps contractors land bigger jobs, though it doesn't increase their project volume or bid win rate. HIRI members can download the full report for free.