Tile and Terrazzo Contractors NAICS 238340

May 7, 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.
• Home builders are cutting costs by using cheaper materials, simplifying designs, and reducing features to make homes more affordable amid high prices, mortgage rates, and economic uncertainty, according to The Wall Street Journal. Builders are installing particle-board cabinets, thinner countertops, fewer windows, and lower-end appliances, while shrinking home sizes and standardizing layouts. Some are also offering mortgage-rate buydowns to attract buyers, but homes still often sell for more than $400,000. Buyers face trade-offs between affordability and quality, with some reporting missing or lower-quality finishes. Industry analysts say these changes are spreading as builders prioritize efficiency and profit margins. While companies argue that homes remain durable and accessible to first-time buyers, critics say newer houses feel less customized and lower in quality than older homes.

• A recent survey by Block, a remodeling planning tech firm, shows homeowners are approaching remodeling with caution as economic pressures reshape industry trends: 53% of respondents budget $25K or less, and 70% rely on savings, reinforcing a shift toward smaller, phased projects rather than full-home renovations. Bathrooms (47%), kitchens (39%), and flooring (35%) dominate project types, reflecting a focus on essential, functional upgrades over resale value. Cost volatility remains a key constraint: 53% of those surveyed cite rising material and labor prices, 33% report reduced budgets, and 52% of those making trade-offs plan to DIY portions of the work. Notably, 30% identify finding a trustworthy contractor as the top barrier, surpassing cost concerns, signaling increased demand for transparency and vetted professionals.
• Demand for building design services showed signs of stabilizing in March, according to an April report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) rose to 49.8 compared to February's reading of 49.3. Any reading of 50 or more indicates growth in architectural billings. March's reading marked the closest the ABI has been to the 50-point growth threshold since early 2023. The score for new project inquiries rose to 56.8 in March from 52.3 in February, but the new design contracts index decreased to 47.8 from 48. The AIA's Chief Economist Richard Branch said, "While billings could soon see positive growth for the first time in three years, ongoing economic and geopolitical challenges, such as the Iran conflict and labor shortages, pose significant risks to recovery. These external issues will have a significant impact on the health of construction activity in both the near and long term."