Mortgage rates in the United States remain high, leading many homeowners to stay in their current homes rather than move. As a result, some homeowners are opting to improve their existing homes with renovations such as new decks or walk-in closets. However, the cost of home equity loans and lines of credit is also rising, making it difficult for homeowners to finance these improvements. This situation leaves many homeowners feeling trapped in aging homes without affordable options for upgrades.
In the second quarter of this year, homeowners originated nearly 20% more second mortgages or home equity lines of credit compared to the first quarter, but experts suggest that these funds are often being used for essential expenses rather than home improvements. Tom Graff, chief investment officer of Facet, noted that as interest rates rise, accessing home equity will become increasingly expensive, which may hinder consumer spending, particularly on large purchases like home renovations.
Graff explained that the Federal Reserve's interest rate hikes are intended to control inflation by reducing consumer spending, which could have broader implications for the economy. He pointed out that consumer spending is lagging behind as a contributor to GDP growth, with a soft job market and declining wage growth adding to economic pressures.
Angie Hicks, co-founder and chief customer officer of Angi, indicated that many homeowners are postponing significant renovation projects due to the rising costs associated with home equity loans. Homeowners are likely to hold onto their low mortgage rates of around two to three percent, as current rates of six to seven percent are viewed as more typical.
Hicks noted that homeowners are prioritizing maintenance over major renovations, focusing on essential repairs like furnace tune-ups instead of extensive remodels. This behavior reflects a pattern seen during previous economic downturns, where consumers adjust their spending priorities based on economic conditions.
Data from Angi shows that 60% of consumers are delaying projects and shifting their focus to maintenance tasks. While kitchens and bathrooms remain popular renovation areas, homeowners are seeking less expensive updates, such as replacing cabinet handles or repainting, rather than undertaking costly renovations.
Philip Odelfelt, CEO of Datavations, reported that big-ticket renovation categories saw declines of 10% to 28% at Home Depot and Lowe's from September 2025 through August 2026 compared to the previous year. Lowe's CFO Brandon Sink acknowledged that affordability is a significant concern, leading consumers to prioritize repair and maintenance projects over discretionary spending on larger renovations.
Sales data indicates that shower remodel products experienced a 21% decline at Home Depot and Lowe's during the same period, with unit sales dropping by 28%. Bathtub sales also fell by 10%, while lower-ticket items like kitchen faucets saw a smaller decline of about 3%. Odelfelt emphasized that the data reflects a broader shift in consumer behavior rather than isolated incidents at specific retailers.