Remodeling Outperforms New Construction Amid High Rates

Remodeling contractors maintained a positive outlook in the second quarter of 2026, with the National Association of Home Builders (NAHB) Remodeling Market Index (RMI) standing at 61. This figure, down one point from the previous quarter, remains well above the 50-point threshold indicating more positive than negative sentiment. The RMI has consistently stayed in the low 60s for the past year, demonstrating stronger performance compared to sentiment in both single-family and multifamily new construction markets, according to NAHB's Eye on Housing blog.

NAHB economists attribute the sustained strength in remodeling to key factors influencing homeowners. Mortgage rate lock-in is a significant driver, as current high rates discourage many homeowners from selling and moving, leading them to invest in improving their existing homes instead. This is further supported by record-high home equity, which provides homeowners with the financial capacity to fund renovations through cash-out refinances, home equity lines of credit, or direct cash payments. Additionally, persistent inventory constraints in the existing-home market and affordability challenges in new construction continue to channel demand towards remodeling projects.

The RMI's Current Conditions Index specifically highlights that smaller and mid-sized remodeling jobs are holding up better than larger, more significant projects. This suggests a trend where homeowners are prioritizing upgrades and improvements that enhance their current living spaces rather than undertaking extensive, high-cost renovations. For construction firms involved in both building and remodeling, these insights underscore remodeling's role as a resilient segment within a housing market still impacted by elevated interest rates, pricing pressures, and regulatory hurdles.