The Daily Build: Rising Materials Costs Delaying Some R&R Projects

Research evidence excerpt

The Daily Build: Rising Materials Costs Delaying Some R&R Projects

The Daily Build

10 July 2026 Citi Research

Remodeler sentiment dips, but remains positive. Remodeler sentiment fell

slightly in 2Q, according to the NAHB’s Remodeling Market Index (RMI) released

yesterday. The index ticked down ~1 point to 61.2, now roughly in-line with the

2025 avg (61.4); a decline in the future conditions index (-2.2 M/M to 52.0) offset

flattish growth for current conditions (70.0) as remodelers reported a decline in

new leads (-2.3 Q/Q to 51.0) and backlog (-1.0 Q/Q to 54.0). Among project sizes,

current conditions for larger, $50k+ projects fell modestly Q/Q (-2.6 to 64.0) and

now sits at a 1-year low; $20-50k projects grew +3.8 Q/Q to 73.0 while smaller

projects were flattish at 74.0. Outperformance among smaller project sizes echoes

recent industry commentary, as affordability concerns and rising materials inflation

cause homeowners to downsize planned renovations. RMI results are roughly in-

line with our current R&R outlook as we expect FY ’26 spending to rise +2% Y/Y led

by Pros while DIY stabilizes. Regionally, the decline in national RMI was driven by

the West (-6 Q/Q), and Midwest (-3), while the Northeast (+11) continues to see

R&R strength; the South remained flat Q/Q. We continue to expect higher-income

consumers will be less impacted by affordability concerns, resulting in Pro activity

outgrowing DIY; although a rise in raw materials inflation will likely result in

additional project delays for larger remodels.

Figure 1. Headline RMI Figure 2. Regional HMI

90 80

3Q 25 4Q 25 1Q 26 2Q 26

80 75

20 50

10 RMI Favorable Outlook Threshold 45

0 40

2003 2005 2007 2009 2012 2014 2016 2018 2021 2023 2025 Northeast Midwest South West

© 2026 Citigroup Inc.