Looking Back, Moving Forward: Dig Into the NHPA 2026 Market Measure Report

Market Measure Evolution
As you dive into this year’s Market Measure report, things might look a bit different than they have in the past, particularly when you browse the size of market numbers and the market breakdown. 

The numbers themselves aren’t radically different from what the North American Hardware and Paint Association (NHPA) has published in the past, but we have revised our estimates on the makeup of the industry in terms of store counts, unit breakdown and sales contribution.

The reasoning behind these changes is pretty simple—the industry is changing rapidly.

We have said it before in this report and in our presentations that the speed of change the industry has seen over the last five years has been nearly impossible to keep up with. 

The models we built 20 years ago to determine the size of the market, unit counts and contribution simply couldn’t keep pace with the rapid evolution of the home improvement retail landscape. 

Add to that the emergence of online players and the increasing sales of hardlines/home improvement through general merchandise retailers and it’s easy to see how quickly old methodology can become outdated.

To account for that, we have revised our industry unit counts. Instead of trying to force retailers into one of three buckets (hardware stores, home centers, lumberyards), we have built new, more inclusive buckets. Now, our breakdown looks at independent hardware, paint, farm supply and allied retailers in one category and then has separate categories for independent home centers, independent lumber/pro dealers and national home improvement chains.

On the sales contribution side, we have taken the overall market sales estimates and put them through a similar process. Instead of cramming those numbers into the three categories we have used in the past, we took a deeper look at contribution by type and added a separate category for general retail to the mix.

We think all of these changes give a much more accurate picture of the industry’s makeup and make it easier to understand how sales of products flow through the channel.

No model is perfect, and we will continue to revise this model as we move forward but we are confident that the new presentation of the data will be much more useful for everyone who interacts with the data. 

2025 Ups and Downs Average Out to Stagnant Growth for Industry

It’s not a cop out, but since the home improvement industry was upended by the COVID-19 pandemic, there is little about industry performance that has been easy to predict.

Yes, the pandemic is now edging into six years ago, but the ripples of the pandemic and the “pandemic adjacent” ripples still working their way through the global economy continue to drive uncertainty, particularly in the home improvement space. 

After three years of rapid expansion, the home improvement industry entered a massive cool-down period at the start of 2024 that showed the industry posting its first year-over-year sales declines in more than a decade. 

So, as 2025 began, we had predicted that we would start to see a return to growth and last year, NHPA was predicting modest expansion for the industry this year. And while there are some positive numbers being reported, when you strip out inflation and look at organic growth, the industry is still sitting on the launch pad, awaiting lift off. 

Industry performance in the first half of 2025 was essentially flat, with NHPA reporting 0% growth and U.S. Census data estimating a slight 0.5% dip. Key performance indicators showed customer transactions down 0.4% while average ticket rose 0.2%, signaling softer foot traffic but resilient spending per visit. Major chains mirrored those trends: Home Depot posted small year-over-year gains, while Lowe’s hovered between flat and slightly negative. 

Outside of sales growth, we are still seeing businesses try to cope with the post-pandemic operational challenges that are impacting net operating profits. From 2020 to 2022, hardware stores, home centers and LBM dealers enjoyed double-digit increases in top-line sales but they also posted some of the highest-ever net operating profits. And similar to how sales have cooled sharply in the last two years, profitability has also normalized: hardware stores’ profit before taxes peaked above 9% during the pandemic but has since settled to 4.7%—still above pre-2020 norms but well below recent highs.

Retailers are responding by concentrating investments in core categories, including paint and sundries (48%), lawn and garden (43%) and hardware and fasteners (38%). Many plan more aggressive inventory strategies in 2026 as they anticipate improving demand.

Because we saw some incremental improvement in Q3 and favorable weather patterns emerging in Q4, NHPA’s forecasts for the industry in 2025 point to “slightly up” year-over-year performance. When you strip away inflationary impacts and look at organic growth, we feel the year will end up being slightly positive, with growth of just below 1% (0.89%). 

This malaise is being driven by a number of factors that seem unfortunately persistent: consumer sentiment, rising costs of living, elevated interest rates and potential tariff-driven price increases still creating headwinds for channel growth. 

On the positive side as we head into 2025, a cooling inflationary environment and added interest rate relief could help stimulate discretionary project spending.

Because of these potential positives, outlook for the industry strengthens in 2026, when both NHPA and the Home Improvement Research Institute (HIRI) expect conditions to improve. NHPA projects 2.4% sales growth if weather patterns remain favorable. HIRI’s projections are somewhat more optimistic, estimating 3.8% total market growth, with the consumer segment expanding 4.3% and the professional segment up 2.9%. Over the following three years, HIRI anticipates a return to long-term normalized growth of roughly 3.5% annually and NHPA’s outlook is slightly more guarded, anticipating growth of approximately 2.7%.

Macroeconomic indicators seem to support the cautious optimism. S&P Global expects U.S. GDP growth of 1.7% in 2025 and 2.4% in 2026. Inflation is easing—CPI rose only 0.2% in July—though core inflation remains above 3%. Employment continues to soften, with July’s 73,000 job gain falling below expectations and unemployment edging up to 4.2%. 

Taken together, the data signals an industry emerging from a period of correction and preparing for slow but steady improvement over the longer term—driven by macroeconomic stabilization, gradual increases in consumer confidence and renewed investment at the store level.