Interior Design Services NAICS 541410

Feb 20, 2026 - Remodeling Spending to Soften in 2026

• Home remodeling spending growth is expected to moderate in 2026, according to the Leading Indicator of Remodeling Activity (LIRA) report released in January by the Joint Center for Housing Studies at Harvard. Homeowner spending on improvements and repairs is expected to increase 2.9% to $527 billion in the first quarter of 2026, compared to Q1 2025. In the second quarter of 2026, remodeling spending will trend downward to $518 billion but still be up 2.1% from Q2 2025. Spending will then moderate further to $517 billion in Q3 2026, up 2% from Q3 2025. In the fourth quarter of 2026, year-over-year spending is forecast to rise 1.6% to $522 billion. While solid remodeling permitting activity and gradually improving single-family home sales will support remodeling activity, potential headwinds include continued weakness of housing starts and elevated interest rates.
• Bathrooms were the most common type of remodeling project in 2025, according to a recent survey of residential remodelers by the National Association of Home Builders (NAHB). The NAHB asked remodelers to rank 22 types of projects on a scale of 1 to 5, where 1 = not common and 5 = very common. Bathrooms emerged as the most common project type with 73% of survey respondents ranking them either a 4 or a 5 - "common" or "very common," respectively. Kitchen remodeling ranked second among project types, with 69% of remodelers rating it as common or very common. Whole-house remodeling was the third most popular project type, with 55% of those surveyed ranking it as either common or very common.

• Demand for building design services declined in January from the prior month, according to a February report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 43.8 compared to December's reading of 47.1. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries fell to 49.3 in January from 52.9 in December, and the new design contracts index dropped to 42.7 from 47.5. January marked the first month since April 2025 that new project inquiries declined, as architecture clients remain cautious and new projects tended to be smaller in scale. All architectural specializations continue to face challenges, but multifamily has seen a slower decline than other segments of the industry.
• North American construction and engineering spending on residential improvements in 2026 is expected to grow by 3% after increasing an estimated 6% in 2025, according to FMI’s first-quarter 2026 North American Engineering and Construction Outlook. In their late-2025 reporting, Home Depot and Lowe's noted there are signs that homeowners are pulling back on big-ticket, discretionary projects, including kitchens and baths. The median age of owner-occupied homes in the US is 45 years, which should support replacement cycles for critical systems, including HVAC, roofs, plumbing, and building envelopes. However, the One Big Beautiful Bill Act sunset homeowner tax credits for energy-efficiency upgrades at the end of 2025, which likely pulled forward some credit-related spending. In 2027, residential improvement spending growth will stay flat at 3%, then rise to 4% in 2028 and 5% in 2029.