According to HousingWire's reporting on recent earnings calls, both Home Depot and Lowe's are seeing a split in the home improvement market. Smaller repair and maintenance projects are holding steady, but the bigger discretionary renovations that homeowners might dream about are struggling to gain traction. The executives at both companies expect this situation to continue through the end of this year and into 2026, with Harvard research suggesting even slower growth ahead through the middle of next year.
The challenges facing larger projects are pretty straightforward when you look at what consumers are dealing with. High interest rates, unaffordable home prices, inflation, and broader economic uncertainty are all weighing on people's willingness to tackle those big-ticket renovations. Both company leaders pointed out that their average customer, typically a middle-income homeowner, actually has a decent financial position with equity in their home and disposable income. The real issue is that confidence has taken a hit, and that's making people choose to fix what's broken rather than dream big.
One interesting dynamic playing out is low housing turnover in the market. According to the reporting, home sales are sitting near historic lows because people with affordable mortgage rates aren't moving. On one hand, this hurts because buyers and sellers traditionally drive renovation spending when they're transitioning homes. On the other hand, homeowners who are staying put longer have a genuine opportunity to improve the houses they're in, especially since many are sitting on real equity they could access.
The long-term picture actually looks promising when you consider that homes across the country are aging significantly. The average owner-occupied home is now 42 years old, compared to 31 years old two decades ago, which means more people will eventually need structural repairs and modernizations. However, Harvard's research projects remodeling spending growth will slow to just half a percent annually by the second quarter of 2027, which suggests we're looking at a prolonged period of modest activity.
What I am seeing locally here in the Bay Area and East Bay is consistent with what these national retailers are reporting. Our buyers and sellers are being cautious right now, focusing on essential repairs rather than the kind of comprehensive remodels that would have been popular just a few years back. For anyone sitting on equity in Fremont or elsewhere in the region, the challenge is timing that bigger renovation project when confidence returns and financing conditions improve.
