More than halfway through 2026, the home improvement industry is facing a confidence recession. Both homeowner and contractor sentiment has turned negative for the first time since the Home Improvement Research Institute (HIRI) started quarterly tracking among each customer segment.
Based on certain indicators, it appears that growth is still happening in industry, as spending is up among households that are still actively pursuing home improvement activities. However, that growth has more to do with inflation, and higher prices, than actually getting more customers.
During The North American Hardware and Paint Association's 2026 Independent Home Improvement Conference, HIRI's Executive Director Dave King presented the state of the market and the macroeconomic factors impacting growth and driving homeowners to delay their projects in 2026. His presentation also covered what home improvement brands can do to create growth in the current environment. Here are some of the top considerations for all stakeholders in the home improvement industry as we round out 2026 and look ahead into 2027:
Data from HIRI’s U.S. Homeowner Project Activity Tracker for Q2 2026 shows that home improvement continues to hold its spot as a middle-tier priority for households in the U.S. But for the first time since HIRI started tracking around 2020, planned home improvement spending over the next 12 months showed its first negative reading.
Additionally, recent project activity fell to its lowest level on record, as only 38% of homeowners completed a project in the past 90 days, down from 53% at the end of 2025.The research shows that there hasn’t been a significant change in disruptive life events, nor a supply problem. Rather, homeowners are still interested in improving their properties, but they are choosing to delay home improvement projects for a few primary reasons, including:
The economy continues to be the biggest concern for U.S. households, cited by 57% of homeowners in Q2 2026, up from 55% in Q1 2026 and 51% in the same quarter last year. Geopolitical uncertainty caused by the political environment, the war with Iran, and volatile U.S. trade policy are all feeding into concerns about the economy.
Inflation was a concern for 51% of homeowners in Q2 2026, up from 45% the previous quarter. Worries around inflation have been increasing since the start of the year. Income increases are not keeping pace with increasing cost of living for many Americans at the same time as inflation is causing prices to spike for necessary and discretionary home improvement products and materials, among other goods.
Similarly, personal finances are a primary concern for 1 in 3 homeowners, which has held steady throughout 2026. A majority of homeowners agree that their personal finances have been negatively impacted to some degree, influencing their home improvement spending over the past two quarters.
HIRI research indicates that in Q2 2026, demand narrowed to a smaller, more committed pool of households doing larger work, which is why aggregate dollars keep rising even while participation falls. Households who are still active spent more on their projects, not less, as the average 12-month spending jumped to $4,628 from $2,173 in Q1. This increase is driven by bigger projects among higher income households.
Meanwhile, many planned projects remain active in terms of intent but have been postponed. A core “competitor” facing building products brand is not a lack of demand but is due to budget uncertainty. Consider these findings:
Many homeowners still intend to complete home improvement projects, but they are waiting until they feel more financially confident or can better justify the investment.
Postponed projects often represent delayed demand rather than permanently lost demand. In short, homeowners aren’t saying “no.” They’re saying, “not yet.”
As many planned projects remain active but postponed, manufacturers and retailers do not have to create need or demand, they have to reduce enough uncertainty for an existing project to move forward. They have an opportunity to reduce decision uncertainty and help customers progress their projects through strategies such as versatile financing options, better product education, and creating clearer value propositions.
The silver lining is that budget pressure usually turn a big project into a smaller one before it turns a “yes” into a “no” and the project gets entirely cancelled. Data from HIRI’s Quarterly Contractor Business Sentiment Tracker and Quarterly Homeowner Tracker for Q2 2026 reveals that:
These smaller projects still offer an opportunity for building products manufacturers and suppliers. Providing a genuine good/better/best ladder in top product categories enables both those who are trimming their projects (the majority) and those who are still upgrading (the minority) to buy from the same lineup. Additionally, give your professionals value-engineered SKU options that helps them find ways to simultaneously win the business AND protect their own profit margin.
In the current competitive landscape, with consumer confidence trending downward, homeowners want to feel confident in spending the money on their home first.
Generating brand awareness is no longer sufficient for capturing market share. Manufacturers have to take steps to address the current market pressures and create repeatable operating advantage. Homeowners are more likely to complete home improvement projects when they trust the product, understand its value, and feel confident they are making the right decision. Expertise, quality, compatibility, and trusted recommendations often have a significant impact on moving projects from "not yet" to completed. Manufacturers have to give the customer a credible way to begin.
Further, HIRI’s research shows that broad promotions have only a limited influence, according to 72% of homeowners. Rather, when asked about their decisions to hire professionals or purchase certain building products and materials, their answers relate to the idea of certainty: quality, expertise, guaranteed workmanship, and ease and convenience. Reducing uncertainty is often more effective than lowering prices when encouraging homeowners to begin postponed projects.
A few strategies brands can use to help retailers and contractors move projects forward include:
These practical strategies confront the main barriers in today’s home improvement market, such as homeowner indecision and budget-driven delays.Additionally, retailers can reduce homeowner indecision by helping customers understand project priorities, simplifying product comparisons, recommending appropriate product alternatives, and providing knowledgeable guidance throughout the project-planning process.
To maintain growth in a flat market, it’s critical for building product brands to stay informed with accurate data that provides an honest overview about the opinions, attitudes, and behaviors of both homeowners and industry professionals. As a HIRI member, you have access to detailed reports and studies, as well as analysis of market dynamics by our team of experts to help you understand what the data means for your brand and how you can apply it to more effectively strategize for the months ahead.
Homeowners are delaying home improvement projects primarily because of budget concerns, inflation, and economic uncertainty rather than a lack of interest in improving their homes. There has been an increase in homeowners scaling down or postponing projects throughout the first part of 2026, based on the Home Improvement Research Institute's Quarterly Homeowner Project Activity Tracker. Because planned projects remain active but postponed, manufacturers and retailers have an opportunity to reduce decision uncertainty through better product education, flexible solutions, and clearer value propositions.
Building product manufacturers can help retailers convert delayed projects by reducing the friction involved in making purchase decisions and feeling like it's "all or nothing." Based on research from the Home Improvement Research Institute (HIRI), effective strategies include offering good/better/best product tiers, educational content, project planning tools, installation guidance, merchandising that simplifies choices, and products designed for phased renovations to address the most urgent needs first. These resources help retailers build homeowner confidence while protecting margins in a flat home improvement market.
Home improvement retailers can reduce homeowner indecision by helping customers understand project priorities, simplifying product comparisons, recommending appropriate product alternatives, and providing knowledgeable guidance throughout the project-planning process. Data from the Home Improvement Research Institute (HIRI) indicates that when asked about their decisions to hire professionals or purchase certain building products and materials, their answers relate to the idea of certainty: quality, expertise, guaranteed workmanship, and ease and convenience. As a result, reducing uncertainty is often more effective than lowering prices when encouraging homeowners to begin postponed projects.