Home improvement spending projected to slow sharply in early 2027

Harvard’s latest remodeling forecast puts an early warning sign on the wall for Home Depot: year-over-year spending on home renovation and repair is projected to slow to just 0.5% by the first quarter of 2027. The Joint Center for Housing Studies said the indicator is national, not store-specific, but it is built to catch turning points in the home-improvement cycle before they show up fully on the floor.

The LIRA, short for Leading Indicator of Remodeling Activity, looks at the current quarter and the next four quarters using historical benchmark data from the American Housing Survey and leading economic indicators. Harvard researchers Rachel Bogardus Drew, Carlos Martín and Chris Herbert have used it to track a market that still spends more than $600 billion a year on home maintenance and improvement. The center said growth in remodeling permits and retail spending on building products has been flat recently, a sign that the next phase of the cycle is cooling rather than accelerating.

For associates and department leads, the first pressure would likely show up in the biggest discretionary jobs. Kitchen and bath remodels, flooring replacements, cabinet and countertop projects, and installed services are the categories most likely to feel a slowdown first if homeowners get cautious about large commitments. Those jobs usually carry longer decision cycles, more design time, and more labor hours tied to measure appointments, special-order fulfillment, delivery coordination and install scheduling. When demand softens, those hours are the ones most likely to be trimmed back before the everyday maintenance business.

The repair-and-maintenance side of the store should be more resilient. Leaky faucets, broken disposals, weatherization fixes, paint refreshes, electrical replacements and appliance swaps are less dependent on confidence in the housing market and more tied to necessity. That matters because Home Depot’s own recent comments have pointed to the same split: customers have been doing more smaller projects, while housing pressure and consumer uncertainty have weighed on bigger-ticket demand.

The Harvard forecast has also been moving in one direction for months. In April 2025, the center projected 2.5% growth and a record $526 billion by the first quarter of 2026. By July, it had cut the expected pace to 1.2% growth by the second quarter of 2026. In October, it said spending would reach $524 billion in early 2026. In January, it lowered the outlook again, to 1.6% growth by the end of 2026 and $518 billion in total homeowner remodeling spending.

That trajectory fits Home Depot’s own numbers. The company reported fiscal 2025 sales of $164.7 billion, with comparable sales up 0.3% for the year, and it guided to about 2.8% total sales growth and 1.0% comparable sales growth for fiscal 2026. If Harvard is right about 2027, the business will not lose demand so much as lose lift. That means tighter baskets, sharper advice, and cleaner in-stock execution will matter more than the broad remodeling boom that has carried the market at other points in the cycle.