It’s a tough time to start a big remodeling project: Tariffs threaten to make renovations more expensive, inflation is still hot, and labor costs continue to climb. Faced with these uncertainties, some homeowners are pausing ambitious plans in favor of more bite-sized projects.
At a time when a full kitchen overhaul can run in the mid-five figures and a major bathroom redo can cost over $25,000, home improvement retailers like Home Depot and Lowe’s say they’re seeing clients prioritize smaller, more affordable projects.
The caution and focus on cheaper projects bucks expectations that millions of homeowners who built up equity and want to keep ultra-low mortgage rates would rush to take on big remodeling projects to upgrade homes that might no longer meet their needs. While renovation spending surged between 2020 and 2022 in conjunction with a homebuying boom, growth slowed after mortgage rates rose and home sales turned sluggish.
Learn more: When will mortgage rates go down?
Remodeling spending is still increasing, though no longer at the pace of the pandemic years, according to data from Harvard University’s Joint Center for Housing Studies. Meanwhile, costs for common projects may continue to mount: On Thursday, President Trump announced a new 50% tariff on kitchen cabinets and bathroom vanities.
“We’re managing [tariffs and pricing] literally real time because this is uncharted waters,” Lowe’s CEO Marvin Ellison said on the company’s most recent earnings call in August. “It’s a dynamic environment.”
Lately, business has been slow for Gabriel Perez, a consultant at Premium Siding & Painting Co. in Austin, Texas. A few years ago, the family-owned company routinely had enough business to keep three crews busy. Now, they usually just have one crew working.
He’s seeing consumers put off pricey discretionary projects like full siding replacements, which can run between $13,000 and $20,000 for a typical home in the area, and instead, opt to make repairs.
Business in window replacements, which are cheaper ($10,000 can cover all the windows on a house), has held up better, as have roof replacements, because they’re more frequently covered by insurance.
“I think people are just trying to save more than they are trying to spend,” Perez said. “It’s expensive to survive just in general.”
Contractors who specialize in renovations are also feeling less confident about what the future holds.
The NAHB/Westlake Royal Remodeling Market Index, a measure of market conditions, slipped to 59 in the second quarter and is down from 77 three years earlier. A level of 50 indicates that more remodelers feel that conditions are good than bad. Remodelers’ views about the future — measured by project inquiries and work backlog — are barely positive at 51 versus 70 in 2022.
“Everyone’s dropping their price,” Perez said. Many customers might be able to land deals by asking for quotes from multiple companies, or by bundling multiple projects with one contractor in exchange for a discount.
“The client has a bit of power in the situation because companies are getting pretty desperate,” he added.
Some of the spending slowdown can be blamed on the state of the housing market. Many homeowners prioritize renovations when they are preparing to sell their homes, and on the other side, new homeowners are often the most motivated to reconfigure their new spaces, said Rachel Bogardus Drew, director of the Remodeling Futures Program at Harvard’s housing center.
But the housing market is stuck in a deep slump: 2025 is on track to be the slowest year for sales in three decades.
Read more: Is now a good time to buy a house?
“With lower sales, we have fewer people doing some of that work on their house,” Bogardus Drew said.
When Laura Wanie set out to renovate her kitchen, she knew a full demolition and rebuild was out of the question financially. She and her husband were just a few years into ownership of their 1990s-era home outside of Minneapolis and had a baby on the way.
“We didn’t have the budget to completely gut our kitchen and living room and make it more open concept or change the layout or anything like that,” Wanie said.
Instead, the two opted for the DIY route, turning to social media and ChatGPT for ideas and guidance. Over the course of a year — including a break after their daughter was born — they repainted the walls, cabinets, and ceilings, swapped out fixtures, installed a new sink, and replaced and updated a backsplash.
They worked with contractors on a few projects they weren’t comfortable doing on their own, including removing large in-ceiling light fixtures and swapping older granite countertops for quartz.
Ultimately, the renovation came in at about $11,000, slightly over their starting $10,000 budget but well below average for a kitchen remodeling spend: Home Depot pegs minor upgrades at $24,000 and more major work that includes kitchen island installation and new appliances at $69,000.
Both contractors and do-it-yourself-inclined homeowners reported that “the No. 1 reason for deferring the large project is general economic uncertainty,” said Home Depot CEO Ted Decker on an earnings call last month.
Executives at the chain said they’ve seen strong demand for smaller projects, but spending on larger discretionary renovations that customers usually finance has been “soft.”
At Lowe’s, a recent survey of construction professionals revealed that they’re also concentrating on smaller projects, especially repairs and maintenance. The chain is confident in the long-term outlook of the home improvement industry, though “we’re still working through some short-term challenges,” including a “cautious consumer,” CFO Brandon Sink said in August.
Wanie, in Minnesota, has since moved on to upgrading a bathroom using a similar DIY approach. She’d like to remove the popcorn ceilings on the main floor of her home, but tabled the idea after a contractor quoted her around $8,000 for the job.
“I just don’t care enough for that,” said Wanie, who added that she budgets carefully for home improvement, given her other expenses like day care, which in her area can run $20,000 a year.
Her advice for homeowners who are wary about costs or their DIY abilities is to think small.
“Honestly, I’ve realized the biggest impact you can make for the cheapest price is paint. And then basic electrical, like swapping out switches, outlets, and light fixtures,” she said. “Anything like that, you can get for a pretty reasonable price and have a huge impact on a room.”
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
Sign up for the Mind Your Money newsletter
Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more
Read the latest financial and business news from Yahoo Finance
link