Residential Real Estate News
Remodeling Outlook Improves as U.S. Homeowners Tap Equity
U.S. home remodelers ended the year with a brighter outlook, even as higher costs and economic uncertainty continued to weigh on household spending decisions.
A closely watched industry gauge from the National Association of Home Builders showed remodeling market sentiment improved in the fourth quarter, signaling resilience in demand for renovation and repair work. The NAHB/Westlake Royal Remodeling Market Index climbed to 64, up four points from the prior quarter, remaining comfortably above the threshold that indicates more remodelers view conditions as good rather than poor.
The pickup came despite a seasonal lull around the holidays. Remodelers reported solid current activity across project sizes, while expectations for future business also strengthened. "Most remodelers are finding reasonably strong market conditions, even with the normal seasonal slowdown," said Nicole Goolsby Morrison, chair of NAHB Remodelers. She cautioned, however, that rising material and labor costs, along with policy and economic uncertainty, continue to make some homeowners hesitant to move forward with projects.
Measures of current conditions were particularly strong. The index tracking present market activity averaged 71, reflecting gains across large, mid-sized and small projects. Demand for big-ticket renovations -- projects valued at $50,000 or more -- posted one of the sharpest increases, underscoring continued investment by higher-equity homeowners.
Forward-looking indicators also improved. The future outlook index rose to 56, supported by an increase in new leads and a growing backlog of work, suggesting contractors are entering 2026 with healthier pipelines.
Economists say structural factors are helping underpin the market. An aging U.S. housing stock, elevated levels of homeowner equity and a rising need for aging-in-place modifications are providing a durable base of demand. "The latest reading is consistent with our expectation for moderate growth in remodeling activity next year," said NAHB Chief Economist Robert Dietz.
While affordability pressures and uncertainty remain key risks, the latest data point to a remodeling sector that is proving more resilient than other parts of the housing market as borrowing costs stay high and home sales remain constrained.
