U.S. remodeling market sentiment edged higher in the third quarter as demand for home improvement projects remained resilient, even as elevated material costs, labor shortages and economic uncertainty continued to challenge contractors.
The National Association of Home Builders’ Remodeling Market Index rose one point to 62 in the third quarter of 2026. The reading suggests that more remodelers viewed business conditions favorably than unfavorably, although expectations for incoming work and project backlogs remained considerably weaker than assessments of current conditions.
The results point to a remodeling sector holding up better than new-home construction in a high-interest-rate environment, as homeowners weigh renovations against the cost of moving or purchasing another property.
“Remodeler sentiment remained stable in the third quarter, although remodelers in certain parts of the country continue to report issues with high material costs and finding enough labor to finish projects on time,” said Elliott Pike, chairman of NAHB Remodelers. Economic uncertainty is also causing some prospective customers to delay decisions on projects, he said.
The index’s current-conditions measure held at 70 for a third consecutive quarter, indicating broadly positive assessments across projects of different sizes. Sentiment toward large remodeling projects costing $50,000 or more increased two points to 66. The reading for mid-sized projects, priced from $20,000 to less than $50,000, fell two points to 71, while the measure for projects under $20,000 slipped one point to 73.
The more forward-looking indicators showed modest improvement but remained closer to neutral territory. The Future Indicators Index rose two points to 54, with the measure of incoming leads and inquiries increasing to 53 and the project-backlog component climbing to 56.
Index readings above 50 mean more respondents characterize conditions as good than poor. The survey measures remodelers’ assessments of current market conditions, incoming business inquiries and outstanding work, providing a gauge of industry sentiment rather than a direct measure of spending or construction output.
NAHB Chief Economist Robert Dietz said the third-quarter results were consistent with the association’s outlook for remodeling activity to remain stable in 2026 and expand modestly in 2027.
Labor constraints are a key obstacle to stronger growth, Dietz said, citing immigration enforcement and competition from data-center construction as factors exacerbating shortages and extending project completion times. Those pressures can raise costs, constrain contractors’ capacity and delay work even when customers are willing to proceed.
Remodeling’s relative resilience reflects a structural advantage over new construction: Homeowners can improve existing properties without taking on the full cost of buying a different home, a consideration when mortgage rates remain elevated. The sector is consequently gaining share within the broader construction market, according to NAHB.
The latest survey suggests the industry is maintaining a positive footing rather than accelerating sharply. Strong current-condition readings indicate continued demand across project categories, while the comparatively subdued measures for new inquiries and backlogs underscore the uncertainty facing contractors as they plan staffing, pricing and workloads for the months ahead.
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