Home Improvement News

Contractors remain broadly optimistic about the state of the home improvement industry, with energy efficiency and technology integration as leading growth opportunities, based on findings in the Home Improvement Research Institute's Quarterly Contractor Business Sentiment Tracker. More than half of contractors believe the market for home improvement will grow over the next year. Less than a quarter expect it to decline slightly or significantly. Contractors increasingly cite inflation and broader economic conditions as the primary macroeconomic pressures shaping their outlook over the next 12 months. At the same time, concern around tariffs has moderated, while newer factors such as labor availability, interest rates, and shifting consumer preferences are emerging as additional, though secondary, considerations.

Demand for home improvement has remained relatively stable in the past year according to contractors. Project pipelines for contractors have shown modest improvement, with bids and awards ticking up quarter-over-quarter and remaining above last year, supported by solid conversion, based on the Home Improvement Research Institute's Q1 2026 Quarterly Contractor Business Sentiment Tracker. However, backlog ranges from stable to slightly easing, which suggests steady but not accelerating demand for home improvement in the past year. Project mix remains anchored in mid-sized jobs ($5k to $25k), but the notable uptick in smaller projects ($5k or less) points to some downtrading or smaller-scope activity. Against this, the sharp rise in project delays and cancellations (driven increasingly by budget constraints) is the clearest pressure signal, implying demand exists but affordability is tightening. 

Material costs and broader economic conditions continue to put pressure on the outlook for the home improvement market, yet sentiment among contractors is still positive, according to findings from the Home Improvement Research Institute's Q1 2026 Quarterly Contractor Business Sentiment Tracker. More than half of contractors expect market growth in the next 12 months, even as competitive intensity among home improvement businesses remains elevated. According to contractors, the biggest opportunities for growth in the market include energy efficiency improvements, technology integration, and expansion into new geographic markets. A majority of contractors anticipate that their business revenue will grow over the next year. 

Labor remains one of the top challenges facing home improvement contractors in 2026, but there has been a decline since the same period last year, according to the Home Improvement Research Institute's Q1 2026 Quarterly Contractor Business Sentiment Tracker. Of those who are experiencing labor challenges, availability is the main issue, with about half are struggling to find skilled labor and about half are struggling with the cost of labor. Additionally, about two-fifths of contractors with labor concerns report that they can't find the quality of labor that they desire. Retention and training are secondary labor challenges, based on research from HIRI. 

While material challenges have been declining in recent months, cost remains the core issue affecting about three-fourths of those with material challenges, based on data from the Home Improvement Research Institute's Q1 2026 Quarterly Contractor Business Sentiment Tracker. This trend signals a shift from supply chain disruption to price-driven strain. Despite most contractors reporting increased material prices, a notably smaller share is increasing their project costs. Many have to decrease project costs as their client’s budget constraints grow, and manly also indicated they are directly eating some of their margin as a result of increased material prices. The recent rise in home improvement project delays and cancellations, driven by budget constraints, also indicates that demand is present, but homeowners are increasingly price sensitive.