Lowe’s stock jumped nearly 6% following a disappointing third-quarter profit report, which was lower than last year. The uptick might be tied to a rather hopeful outlook for home improvement retailers in the coming year.
CEO Marvin Ellison suggested that many Americans are focusing on renovations instead of buying new homes due to persistent high interest rates. He believes this trend could lead to increased renovation activities next year.
Will home renovations increase in 2025?
Last year, tariffs significantly impacted essential raw materials like lumber, causing considerable slowdowns in the renovation and construction sectors. However, as Ellison notes, many homeowners feel “stuck” and are unable to transition to new properties.
In October 2025, active listings rose 15.3% compared to the previous year, marking the 24th consecutive month of increases. But even with more inventory and lower interest rates at their lowest in a year, homes are lingering longer on the market—63 days on average, which is up 5 days from last year.
Because of these dynamics, Ellison sees a transformation in how homeowners might use their equity to fund renovations. He mentioned the potential for homeowners to tap into home equity lines of credit for larger home improvement projects, especially since many are hesitant to give up low fixed mortgage rates.
Homeowners may have favorable mortgage rates, but they often wish to update their spaces—maybe a new kitchen, an extra bathroom, or just a modern aesthetic.
Data indicates that spending on home improvements is projected to remain steady through mid-2026. According to the Harvard University Joint Center for Housing Studies, growth is expected yet modest.
The latest LIRA report anticipates a 2.4% rise in renovation spending early in 2026, followed by a slight dip to 1.9% by mid-year.
Rachel Bogardus Drew, director of the Center’s Remodeling Futures Program, expressed that the increase in remodeling permits and single-family home sales point to stable demand for renovations next year. Total homeowner renovation spending could reach a record $524 billion early in 2026.
The older the homeowner, the more renovations will be required.
The average age of U.S. homes has hit a record high—about 44 years. Additionally, first-time homebuyers are now typically around 40 years old, according to recent data from the National Association of Realtors.
This aging housing stock and homebuyer demographic underline the necessity for renovations, as homeowners often want to stay in their residences as long as possible. A survey by Charles Schwab revealed that many baby boomers wish to invest in their homes for long-term enjoyment.
An associated report noted that baby boomers spent an average of $14,140 on home projects last year, signifying their commitment to home enhancement.
Angie Hicks, co-founder of Angie’s, highlighted the dedication homeowners have towards their spaces, despite rising economic pressures. She maintains a positive outlook for 2025, emphasizing the enduring value of home ownership both financially and emotionally.
The survey indicated that 93% of homeowners plan improvement projects in 2025, with 46% eyeing larger renovations over the next five years, like kitchen remodels and bathroom upgrades. This enthusiasm could significantly drive the renovation boom into 2026.
Will uncertainty keep buyers on the sidelines?
Recently, the average rate for a 30-year fixed mortgage climbed by 2 basis points to 6.24%. There’s a growing sentiment among economists and homebuilders that potential buyers may wait for lower interest rates before entering the market.
Builder confidence in single-family homes nudged up slightly to 38 in November, according to the National Home Builders Association and Wells Fargo Housing Market Index. Although it’s a modest increase, it reflects some movement in the market.
However, challenges remain, as tight labor markets and consumer credit conditions still create obstacles for sales. The NAHB report forecasts a slight rise in single-family housing starts in 2026, potentially signaling a rebound for both construction and renovation sectors.
If renovation and new home construction can gain momentum in 2026, it may benefit home buyers and sellers significantly.
