Home price growth is expected to stay modest and that changes renovation decisions

Home prices are no longer sprinting ahead at double‑digit rates, and that slower pace is quietly rewriting the math behind every kitchen upgrade and bathroom gut job you consider. When you cannot count on rapid appreciation to bail out an over‑ambitious project, the way you plan, prioritize, and finance renovations has to change. Instead of chasing the highest possible resale bump, you are increasingly weighing comfort, cost control, and staying put against a backdrop of modest price growth.

The new reality: softer price growth and a stay‑put mindset

You are operating in a housing market that has shifted from frenzy to a kind of uneasy balance, where prices are still high but future gains look restrained. Forecasts for 2026 point to a steadier environment in which home prices are expected to rise only modestly, with home prices are expected to notch small increases rather than the spikes of the pandemic era. That outlook matters because it limits how much of your renovation budget you can reasonably expect to recoup through appreciation alone.

At the same time, high borrowing costs and stubbornly expensive listings are keeping you, and millions of other owners, in place. Analysts describe a market where Experts and Researchers expect home price growth in 2026 to soften compared with the recent boom, which makes trading up less compelling. Instead of stretching for a new address, you are more likely to rework the home you already have, but with a sharper eye on whether each dollar improves your daily life, your long‑term flexibility, or both.

Why remodeling is edging out moving, even with modest gains

When you stack the costs of moving against the costs of renovating, the balance has tilted decisively toward staying put. In 2025, high mortgage rates and elevated prices have made selling and buying again a punishing exercise, which is why Jul and other local voices frame remodeling as the more budget‑conscious option for many homeowners. You avoid transaction costs, you keep your existing low‑rate loan if you have one, and you can phase projects over time instead of swallowing a single, massive outlay.

That does not mean you renovate without discipline. With appreciation expected to be modest, you cannot assume that a luxury kitchen or a second story will be “paid for” by the market in a few years. Instead, you are weighing whether a project solves a concrete problem, such as a cramped layout or aging systems, and whether it fits your likely time horizon in the home. The calculus is less about chasing the top of the market and more about making your current property work better for you, a shift that aligns with Money and Remodeling research showing many owners renovate precisely because they could not or did not want to move.

How slower appreciation reshapes your renovation ROI

In a hot market, even mediocre projects can look smart because rising values mask design missteps and cost overruns. In a cooler environment, the relationship between renovations and resale value becomes more nuanced, and you have to think like a local economist. Analysts examining How market dynamics determine the impact of remodeling on home values note that the same project can deliver very different returns depending on neighborhood demand, inventory, and buyer preferences.

That is why you cannot rely on generic “national average” ROI tables when you decide whether to finish a basement or add a deck. While rising interest rates and low inventory have supported prices in many areas, the effect on renovation payback is highly local, and the research stresses that you need to think carefully about controlling for other differences before assuming a project will boost value. In practice, that means talking to agents who know your micro‑market, studying recent sales photos, and using tools that reflect your ZIP code rather than broad regional averages so your renovation plan reflects the actual conditions you will face when you eventually sell.

What the spending data tells you about realistic budgets

Your own instincts about cost are probably shaped by sticker shock, and the national numbers back that up. The U.S. home remodeling market reached Home Remodeling Key Stats of $503 billion in 2024, a figure that reflects not only big‑ticket additions but also a steady stream of smaller upgrades like lighting, security, and decks. At the household level, the median homeowner spending on renovations has climbed, which means your neighbors are likely investing more in their homes than they did a few years ago, even as price growth cools.

Yet there are signs that the peak frenzy has passed, and that should inform how aggressively you set your own budget. Researchers tracking the home improvement market report that Home improvement budgets and spending have eased from their highs, with the median spend on home projects dipping from the pandemic peak and many owners surprised when final bills run beyond what was initially quoted. That combination of elevated but moderating spending and frequent overruns is a warning to build a contingency cushion into your plans and to resist the temptation to chase every upgrade on your wish list at once.

Renovation demand is steady, but your priorities are shifting

Even with softer home price growth, renovation activity is not collapsing, it is normalizing. Analysts expect Remodeling Expected to Continue Slow, with Steady Growth Into Next Year as Annual expenditures for improvements and maintenance keep rising, just at a more measured pace. That pattern suggests you are not alone in choosing to invest in your current home, but you are doing it with more deliberation and less fear of missing out.

Private spending data tells a similar story of resilience rather than retreat. Industry researchers note that the trajectory of home improvement outlays stabilized in 2023, with spending reaching $254.3 billion, representing a minimal 0.2% decline before recovering as households resumed addressing maintenance and upgrade needs. For you, that means contractors are still busy, materials are still in demand, and you should expect solid but not explosive competition for labor, which can influence both your project timing and your negotiating leverage.

Design dollars are moving from flash to function

With less speculative upside to chase, you are more likely to spend on projects that make your home work better rather than simply look more impressive in listing photos. Studies of how Homeowners allocate remodeling design dollars show a growing desire to rejuvenate physical spaces that you actually use every day, such as kitchens, baths, and flexible work areas, instead of pouring money into rarely used formal rooms. That shift reflects a more pragmatic mindset, where you prioritize layouts, storage, and durability over purely cosmetic flourishes.

At the same time, you are paying closer attention to how design choices will age in a market that is no longer racing ahead. Bold, idiosyncratic finishes can be thrilling, but they also narrow your future buyer pool if you need to sell before a full market cycle plays out. Guidance aimed at Considering the Resale Value of Renovation Projects When you evaluate potential homes emphasizes choosing upgrades that have a broader appeal, such as neutral palettes, quality flooring, and energy‑efficient windows. In a modest‑growth environment, those timeless choices help protect your equity while still giving you a space that feels current.

Cost pressures and the rise of phased, right‑sized projects

Even as you lean into practicality, you are still confronting stubbornly high project costs. Analysts comparing renovation categories highlight that Comparison of project costs by type shows that home improvement costs have climbed across the board, and that many owners are paying out of pocket to address repairs they cannot postpone. While high mortgage rates and skyrocketing home prices have locked millions of households into their current properties, they have also forced you to be more surgical about which projects you tackle now and which can wait.

That is where phasing comes in. Instead of a single, sweeping renovation, you might start with structural and systems work, then move to kitchens and baths, and only later address finishes and landscaping. The trend toward phased, right‑sized projects is reinforced by data showing that the median spend on home improvements has moderated but remains significant, as detailed in However detailed home renovation statistics. By breaking work into stages, you can adapt to changing costs, avoid over‑leveraging in a market with limited price growth, and keep your home livable throughout the process.

Financing renovations when moving is off the table

With selling less attractive, you are increasingly tapping the equity you already have to fund improvements. Reports on how Homeowners are pouring their equity into renovations describe a market where high home prices and mortgage rates have created “no incentive” to sell, so you instead use home equity loans and HELOCs to upgrade in place. That strategy can be rational in a modest‑growth environment, but it also raises the stakes, because you are tying more of your net worth to a single, slowly appreciating asset.

To manage that risk, you need to be clear about which projects justify debt and which should be funded with savings. Guidance focused on Deciding which renovations to undertake stresses that Homeowners should weigh their local real estate market, their long‑term plans, and their personal finances before committing. In practice, that might mean financing a roof replacement or structural repair that protects the home’s value, while paying cash over time for cosmetic updates that are more about taste than necessity.

How to choose projects that work in a modest‑growth market

When you accept that home price growth will be modest, your renovation strategy becomes less about chasing the highest theoretical ROI and more about aligning projects with how you actually live. You start by ranking upgrades according to three tests: whether they solve a real problem, whether they are likely to appeal to a future buyer, and whether they fit your budget without assuming aggressive appreciation. Industry research on Housing affordability and remodeling shows that many owners prioritize projects that improve livability, such as updated kitchens, energy efficiency, and functional outdoor space, even when the pure financial return is moderate.

To refine that list, you can look at how Dec guidance for Boise homeowners frames the choice between remodeling and moving in a softening market. The advice emphasizes focusing on upgrades that bring your home in line with neighborhood norms rather than overshooting them, and on improvements that add flexibility, like converting unused rooms into offices or multigenerational suites. By anchoring your decisions in local data, realistic appreciation assumptions, and your own long‑term plans, you can treat renovation less as a speculative bet and more as a disciplined way to make a modestly appreciating asset work harder for you.

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*This article was developed with AI-powered tools and has been carefully reviewed by our editors.