A sustained recovery in home improvement demand will likely depend on easing housing affordability pressures, particularly through lower mortgage rates and stabilizing home prices, according to Bernstein.
The home improvement sector has been weighed down by a sharp rise in mortgage rates and home prices since the pandemic, which has reduced housing turnover and discouraged large discretionary remodeling projects. As a result, demand has remained subdued despite stable underlying housing needs.
A key trigger would be a meaningful decline in mortgage rates. Bernstein estimates rates need to fall below roughly 5%–5.5% to make buying or moving homes financially viable again for both new and existing homeowners. Lower rates would help unlock housing transactions, which typically drive spending on renovations and big-ticket upgrades.
At present, a “lock-in” effect is limiting activity. Many homeowners secured ultra-low mortgage rates during the pandemic and are reluctant to move and refinance at higher rates, reducing housing turnover and associated renovation demand.
Affordability remains another major constraint. The cost of buying a home has risen significantly relative to incomes, while renting has stayed comparatively stable, pushing more households to delay ownership. This dynamic has further dampened demand for large-scale home improvement projects tied to home purchases or relocations.
In addition, elevated remodeling costs, driven by higher material and labor expenses, have made discretionary projects less attractive. Median project costs have risen sharply in recent years, further weighing on demand.
source https://www.investing.com/news/economy-news/what-conditions-could-trigger-a-home-improvement-recovery-4574070
