Bleak Housing Update from JCHS

Research evidence excerpt

Bleak Housing Update from JCHS

Broadlines & Hardlines

Home Improvement - Market Overweight

Bleak Housing Update from JCHS June 17, 2026

The Wolfe Byte

Today, JCHS released a cautious report suggesting Home Improvement is facing a difficult path back to growth. The

affordability crisis continues to worsen, remodel spend is still above pre-COVID levels and pull forward remains

a challenge for the industry.

Comments from the Fed also suggest that rate hikes are increasingly likely. The yield curve is now pricing in 100%

chance of a hike by the December Fed Meeting and a 50% chance of a second hike (previously just 1 hike priced

in). As a result, focusing on stocks with more idiosyncratic ways to win in home improvement (e.g., LOW) remains

our preferred path forward.

(-) Commentary from JCHS Team Is Cautious On Housing in 2026. The tone of the JCHS report (click here for data)

remains very cautious on the underlying demand in housing with household formation likely to tick lower, affordability

challenges and rising rates all holding back growth. The message was that the softness will persist through 2026 and

there also seems to be few catalyst to really unlock the market, despite some signs of legislative movement in select

states to address affordability issues.

(-) Remodel Spend Still 4% Above Pre-COVID Trend; More Demand Pull Forward To Work Through. Based on the

JCHS data, their remodel index is still tracking +4% ahead of the pre-COVID run-rate (when rates were materially lower

so that likely isn't the right base rate but a good starting point in our view). From 1996-2018, remodeling spend grew

+2.8%, which implies spend should be ~$487bn, but the sector is at $508bn. The pull forward in spend continues to

be an overhang.