Why remodelers aren't panicking about rising rates

Rising mortgage rates are rattling homebuyers and cooling existing home sales, but remodelers are largely shrugging it off and in some ways, welcoming it.

"Ongoing positive remodeler sentiment is consistent with the NAHB outlook, given an aging housing stock and the lock-in effect of elevated mortgage rates keeping owners in their homes," its Chief Economist Robert Dietz said in a press release.

Few consumers put renovation projects on hold during the first quarter because of economic and political uncertainty, remodelers' responses to an industry survey found. But not all of the sentiment was positive.

While their attitude about the business remains positive for the first quarter, it is still lower than it was for both of the bookend periods of 2025, the National Association of Home Builders/Westlake Royal Remodeling Market Index found.

The first quarter seasonally adjusted index of 62 compared with 64 in the fourth quarter and 63 one year ago. Since the second quarter of 2020, this is the third lowest the RMI has been; the only periods with a lower mark was the second and third quarter of last year.

A score over 50 means survey participants are viewing current market conditions as good. The RMI was last under 50 in the first quarter of 2020.

The conflict with Iran started on Feb. 28. Since then the U.S. economy is reporting higher inflation largely due to the price of oil, as well as rising mortgage rates.

Many consumers use a mortgage or home equity product to pay for renovations, while others turn to higher rate unsecured borrowings (such as a credit card or a personal loan) or use cash. 

What lower existing home sales mean for remodeling

Existing home sales fell 3.6% month-to-month in March, the National Association of Realtors announced Monday.

Rising mortgage rates caused NAR Chief Economist Lawrence Yun to revise the existing sales forecast for 2026 to a gain of 4%, from 14%; new home sales projections were cut to flat from a 5% year-over-year rise.

"The Iran war has numerous negative impacts on the economy, fueling inflation, dampening sentiment, and causing a surge in interest rates, reflected in mortgage rates as well," Bankrate's Senior Economic Analyst Mark Hamrick said about the existing home sales release.

However, Lisa Sturtevant, chief economist at Bright MLS, noted at the end of the quarter, 1.36 million homes were available for sale, up 2.3% from the same day one year prior.

"This increase in supply is a welcome development for the spring season, though it remains to be seen if more choices will be enough incentive for buyers to enter the market in large numbers," Sturtevant said.

What remodelers are telling their clients about costs

Remodeling industry participants are now working on managing their customers' cost expectations, said Elliot Pike, a remodeler from Homewood, Alabama, who is the NAHB Remodelers chair.

The Current Conditions Index averaged 70 for the first quarter, down 1 point from the prior three months, with two of its three components lower.

The score for large remodeling projects, $50,000 or more, fell 2 points to 67, while the measurement for mid-range cost activities (between $20,000 and $50,000) also fell 2 points to 69. But the small-sized remodeling project measurement increased 1 point to 74.

Meanwhile, the Futures Indicators Index averaged 54 for the first quarter, a decline of 2 points from the fourth quarter, as the component measuring the rate at which leads and inquiries are coming into remodelers fell by 1 point to 53. The part which measures the backlog of remodeling jobs fell 3 points to 55.

The report shows regional variations, with the RMI in the Northeast down by a significant amount quarter-to-quarter, to 61 from 71. The South was also lower but by 3 points to 62 from 65.

Meanwhile, both the Midwest and West regions were higher by 2 points, at 70 and 54 respectively.