3 Core Home Improvement Forecast Drivers to Watch

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.