Paint and Wallpaper Stores NAICS 444120

May 27, 2026 - Remodeling Spending to Slow Early Next Year

• Home remodeling spending growth is expected to slow significantly early in 2027, according to the Leading Indicator of Remodeling Activity (LIRA) report released in May by the Joint Center for Housing Studies at Harvard. Homeowner spending on improvements and repairs is expected to increase 1.8% to $516 billion in the second quarter of 2026, compared to Q2 2025. In the third quarter of 2026, remodeling spending will trend slightly upward to $518 billion, up 2.4% from Q3 2025. Spending will then remain flat at $518 billion in Q4 2026, up 1.8% from Q4 2025. In the first quarter of 2027, year-over-year spending is forecast to rise just 0.5% to $523 billion. Remodeling permitting and building product sales have remained flat recently, but homeowners are expected to maintain spending near 2025 levels. Remodeling spending is likely to remain subdued, barring a turnaround in the construction sector.
• The Wall Street Journal reports that in May, AkzoNobel rejected a roughly 12.49 billion euro takeover bid from Nippon Paint and Sherwin-Williams, choosing instead to pursue its planned merger with Axalta Coating Systems. The decision underscores ongoing consolidation pressures in the global paint and coatings industry, where companies are seeking scale, portfolio breadth, and geographic reach to compete across decorative, industrial, and specialty segments. Akzo said the offer, which included a proposed breakup of its business, undervalued its long-term prospects and was subject to regulatory uncertainty. The bid represented a 39% premium to Akzo’s prior closing price. Akzo’s boards reaffirmed support for the all-stock Axalta deal, while Nippon Paint and Sherwin-Williams did not comment.

• CNBC reports Home Depot beat Wall Street expectations and reaffirmed full-year guidance as homeowner customers remained resilient despite higher gas prices and weak consumer confidence. Fiscal first-quarter revenue rose about 5% year over year to $41.8 billion, while net income fell to $3.29 billion, down 4% year over year. Executives said customers continue to spend on smaller projects but are deferring larger renovations. Home center retailers continue to face headwinds related to a soft housing market, including high mortgage rates, lower housing turnover, and economic uncertainty. The company is investing in its professional customer segment through acquisitions to capture more market share in a large, fragmented market, while maintaining modest sales growth expectations this year. The trend of homeowners taking on smaller, less expensive projects could benefit paint and wallpaper stores, as painting is an economical way to refresh a room's look.
• North American construction and engineering spending on residential improvements in 2026 is expected to decline 0.4% after being flat in 2025, according to FMI’s second-quarter 2026 North American Engineering and Construction Outlook. Recent financial reports from Home Depot and Lowe’s noted signs that homeowners are pulling back on big-ticket, discretionary projects. In 2026, activity is increasingly concentrated on essential repairs rather than discretionary upgrades. Aging housing stock, now with a median age of 45 years, continues to support baseline demand for critical systems, including building envelopes. However, elevated mortgage rates and homeowners with a locked-in low rate are limiting home sales, reducing renovation activity tied to moves. Higher borrowing costs and tariffs on materials are further pressuring discretionary spending. Additionally, the sunset of homeowner tax credits for energy-efficiency upgrades at the end of 2025 pulled some demand forward into late 2025. Residential improvement spending is projected to rise 2% in 2027, 4% in 2028, and 5% in 2029 as conditions stabilize and demand gradually shifts back toward larger projects.