How many remodeling referrals should agents expect to hand out to past clients this year? According to the Harvard University’s Joint Center for Housing Studies (JCHS) latest update to its Leading Indicator of Remodeling Activity (LIRA), spending on remodeling is expected to grow, but slow down gradually, as the year goes on.
The current year-over-year growth in spending on home remodeling is 2.9%, per LIRA, which is projected to decline to 1.6% growth by the end of 2026. However, even with that slowed growth, the JCHS expects annual homeowner spending on remodeling to reach $522 billion. The previous LIRA update, released in October 2025, had likewise projected slow but steady annual growth.
It’s a trajectory worth watching for real estate professionals, as the Center’s Managing Director Chris Herbert noted in a write-up of the LIRA that remodeling trends “closely track” with trends in the broader housing market.
“Single-family home sales and permitting activity have picked up modestly from very low levels, which should support a nominal increase in remodeling activity this year,” said Rachel Bogardus Drew, director of the Remodeling Futures Program at the Center.
“If interest rates begin to ease, that could provide a much-needed boost to both housing construction and retail sales of building materials, which for now continue to pose significant headwinds to homeowner improvement spending,” Herbert added. The National Association of Realtors®’ 2025 Remodeling Impact report found that, if cost was not a factor, 92% of responding homeowners would choose to remodel additional sections of their home.
The Federal Reserve cut interest rates in December due to concerns about the labor market outweighing still-ongoing inflation; however, at the most recent Federal Open Market Committee (FOMC) meeting, interest rates were maintained. The voting board also appears to be divided on the proper course of action per the December Fed minutes.
President Trump has suggested he intends to announce his pick to replace retiring Fed Chair Jerome Powell soon, which would have major implications for the trajectory of interest rates throughout the year—and, in turn, on how much homeowners might spend on remodeling.
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