A new five-year forecast from the Home Improvement Research Institute (HIRI) shows real growth expected in 2025, with modest gains projected from 2026 through 2029 as inflation slows and nominal growth improves. The professional channel will drive activity in 2025, with consumer spending expected to pick up later as DIY projects and replacement needs return. Here are three core home improvement forecast drivers HIRI suggests watching going into 2026.
Inflation
The Consumer Price Index has eased from its peak and inflation is moderating, enabling the Federal Reserve to begin interest rate cuts as conditions allow. Although mortgage rates are edging down slightly, affordability remains strained, keeping pressure on discretionary projects.
Household Fundamentals
Real disposable income is expected to improve into 2026 as savings return to pre-pandemic levels. Consumer sentiment, which hit a low in Q3, is projected to recover as inflation cools and incomes stabilize, supporting an upturn in 2026.
Housing Market Mechanics
Existing home sales are forecasted to climb and housing starts are expected to hold steady. Home prices may dip before rebounding, which could shift activities from maintenance-only to selective improvements as affordability stabilizes. Turnover will continue to limit big-ticket remodels in the near term.