Inflation has moderated, yet expenses for materials, labor, and financing continue to exceed pre-pandemic levels, contributing to a slowdown in home renovation activity. Many homeowners are adopting a "wait and see" stance on remodeling projects.
According to the Associated Builders and Contractors, input prices increased 0.2% in June and are 2.1% higher than the previous year. While this data pertains to commercial projects, it involves materials like steel, copper, concrete, and energy that also affect home upgrade costs.
"Nonresidential input price escalation has accelerated in 2025," stated ABC Chief Economist Anirban Basu in the report. "Despite higher-for-longer interest rates and rising input prices, contractors remain relatively optimistic."
Material and energy costs are rising sufficiently to keep project budgets constrained. Homeowners anticipating significant price reductions may face indefinite delays.
Mortgage rates remain elevated compared to pandemic lows, such as the 2.96% average for 30-year fixed loans in 2021. Borrowing costs have started to decrease after two years of sharp increases.
Financial analytics firm Curinos reports that home-equity line of credit rates have declined from approximately 9.8% in October 2024 to about 8.13% currently. This reduction provides homeowners slightly more flexibility to use equity for repairs or upgrades, though a return to pandemic-era rates could take years.
Some homeowners are delaying renovations in expectation of further material price declines. Market data indicates lumber futures are trading near $540 per thousand board feet, close to September 2024 lows, due to oversupply and weaker demand.
Prices have retreated from 2021 record highs but are expected to remain in a midrange rather than revert to pre-pandemic levels. Material costs have stabilized, though not at the low levels some homeowners await.
Economic uncertainty is a primary factor causing homeowners to hesitate. A survey by home-insurance provider Guardian Service found that 71% of homeowners postponed renovations or repairs this year due to economic concerns.
Nearly one-third of respondents plan to wait one to two years before undertaking major upgrades, while 15% are delaying them indefinitely. The survey noted that many policyholders are unaware that certain home improvements, such as installing storm-resistant windows or replacing an aging roof, can reduce insurance premiums.
Some homeowners believe waiting will increase contractor availability. However, home-services platform Contractor Accelerator reports a record 32% labor shortage in the residential construction industry for 2025.
This shortage represents the most severe skilled-trade gap in modern construction history, with housing starts down 18% nationwide and average project timelines extending from seven months to nearly eleven. For homeowners, this results in longer waits and higher bids, with skilled labor potentially becoming the main bottleneck.
Others await lower labor prices, but recent data suggests this is improbable. An analysis by Construction Coverage found that construction and extraction workers earned a mean annual wage of $63,920 in 2024, indicating wages have increased faster than most other costs and are unlikely to decrease.
Even if inflation cools, contractor labor is expected to remain a costly component of renovations.
Some homeowners are holding out for new rebates or tax credits before upgrading. Most federal energy-efficiency incentives for improvements like insulation, heat pumps, and smart thermostats expired at the end of 2025, with no new incentives anticipated.
According to KPMG, only credits for new homes built through the summer of 2026 remain available. Those seeking energy credits are advised to pursue energy savings directly as early as possible.