H
ome Depot’s latest quarterly report revealed a year‑over‑year decline in earnings, yet its rival Lowe’s saw its shares climb almost 6 %. The market reaction suggests investors are betting on a rebound in the home‑improvement sector, driven by optimism about future demand.
CEO Marvin Ellison told Yahoo Finance that Americans possess substantial home equity and are reluctant to abandon the low mortgage rates they currently enjoy. With many homeowners and renters feeling trapped in their existing homes, Ellison predicts a surge in renovation activity next year. He argues that people will increasingly tap into home‑equity lines of credit to fund larger, discretionary projects—kitchen upgrades, extra garages, modern bathrooms—rather than refinance or purchase new properties.
The data support this view. In October 2025, active listings rose 15.3 % year‑over‑year, marking the 24th consecutive month of growth. Even as inventory expands and mortgage rates hit 12‑month lows, homes are staying on the market longer for the 19th straight month, averaging 63 days—up five years. This lag indicates that buyers are still hesitant, but the market is gradually warming.
Ellison’s outlook is echoed by the latest LIRA report, which projects renovation and repair spending to grow about 2.4 % in early 2026, then slow to 1.9 % by the third quarter. Rachel Bogardus Drew, director of the Remodeling Futures Program at Harvard’s Joint Center for Housing Studies, notes that rising remodeling permits and single‑family sales point to a stable demand for home improvement. She estimates that total homeowner remodeling spending could reach a record $524 billion in early 2026.
The aging housing stock and older buyer demographic further fuel this trend. The average U.S. home is now roughly 44 years old, while the typical first‑time buyer is 40, the highest ever recorded. With homes and buyers both older, many homeowners are motivated to extend their dwellings’ lifespans through upgrades. A 2025 Charles Schwab survey found that 45 % of boomers expressed a desire to “enjoy my money for myself while I’m still alive,” a sentiment that translates into home‑improvement spending. In 2024, baby boomers (born 1946‑1964) spent an average of $14,140 on projects, according to an Angi report.
Angie Hicks, co‑founder of Angi, told Newsweek that homeowners remain committed to their properties despite economic pressures. “The desire to create functional, personalized, and well‑maintained spaces is stronger than ever,” she said. Her research shows that 93 % of homeowners plan projects in 2025, and 46 % anticipate large‑scale renovations—kitchens (31 %) and bathrooms (28 %)—within the next five years. These figures suggest a potential boom in renovations by 2026.
Mortgage rates are a key factor keeping buyers on the sidelines. Freddie Mac reported the average 30‑year fixed‑rate at 6.24 %, up two basis points. Many prospective buyers are waiting for rates to dip below 6 % before committing. While it’s unclear whether such a drop will occur in 2026, builder confidence is on the rise. The National Association of Home Builders/Wells Fargo Housing Market Index for newly built single‑family homes rose to 38 in November, a modest but positive shift. NAHB chief economist Robert Dietz noted that a softening labor market and stretched consumer finances still pose challenges, yet he forecasts a slight uptick in 2026 as builders anticipate marginally better sales conditions.
If both new construction and renovation markets recover in 2026, the impact could be significant for buyers and sellers alike. A stronger renovation sector would support home values, while a rebound in new‑home sales would stimulate the broader economy. Investors and homeowners are watching closely as rates, equity, and consumer sentiment converge to shape the next chapter of the housing market.
