Hardware Retailing The Industry's Source for Insights and Information
Data from the Home Improvement Research Institute (HIRI) shows a notable shift in the current housing market: while fewer Americans are taking on home improvement projects, those who do are spending significantly more.
According to HIRI’s recent Q1 2026 Homeowner Project Activity Tracker, overall homeowner participation in home improvement projects dropped to 40% in Q1 2026, down from 44% during the same period last year. However, average spending per project increased 36% year over year, from $3,957 in Q1 2025 to $5,368 in Q1 2026.
This trend highlights how inflation and material costs are driving up household budgets even as Americans actively pull back from large-scale discretionary renovations. In a clear sign of scaling back, 62% of homeowners opted to repair an existing item or structure rather than replace it completely—a jump from 51% just one quarter prior.
Trade professionals on the front lines are directly feeling the consumer financial strain. According to HIRI’s Q1 2026 Contractor Business Sentiment Tracker, the shift away from “dream home” remodels is impacting industry pipelines.
A Spike in Delays and Cancellations
Around 44% of contractors had scheduled jobs postponed in Q1 2026 (an increase from 27% in Q1 2025), while outright cancellations more than doubled year-over-year (from 4% to 10%).
Budgets Are the Bottleneck
Contractors identified financial constraints as a leading cause of project delays and cancellations. While the share citing budget-related reasons was relatively consistent year over year (30% in Q1 2025 versus 28% in Q1 2026), it rose sharply from 15% in Q4 2025, suggesting affordability concerns intensified heading into 2026. Additionally, 49% of contractors cited inflation as a primary pressure on their business.
The Shrinking Scope of Work
Aligning with the homeowner’s desire to “repair vs. replace,” contractors report their project mix is shifting toward smaller, tightly budgeted jobs. In Q1, 44% of all contractor projects cost under $5,000, while only 8% of jobs exceeded $100,000. This also signals a competitive environment, putting downward pressure on contractors’ project bid values.
“The environment we are seeing so far in 2026 is the culmination of financial pressures building throughout the previous year,” says Dave King, executive director at HIRI. “While household incomes showed surface-level stabilization last year, those gains were often offset by eroding liquidity and discretionary capacity. The result is a market increasingly focused on maintaining and extending the life of existing homes rather than pursuing major upgrades.”
The findings suggest growing demand for products and services that help homeowners maintain, repair and extend the life of existing systems and structures while managing costs.
Join Dave King at the 2026 Independent Home Improvement Conference on July 28-30, 2026, at the Orlando Grande Lakes Resort in Orlando, Florida, where King will discuss the current state of the home improvement industry, including key economic pressures shaping the independent channel. He will also highlight where the market is headed and the steps retailers should take to stay competitive in a changing landscape.
