Home Improvement Lead Indicator: Do Four Months Make a Trend?

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Home Improvement Lead Indicator: Do Four Months Make a Trend?

Another Month of +LSD HILI, We Still Think the Year Closer to +1%

May input data moved our Home Improvement Lead Indicator (HILI) to +3.0% for Nov-26, just 10bps ahead of April’s

revised number. Typically, we like to think that 4 months (+2.7%, 3.1%, 2.9%, 3.0%) can spark the beginning of a trend, yet we

aren’t rushing to push our category growth estimate of +1% any higher. Nevertheless, our improved HILI coincides with our view

that HI demand could improve sequentially into 2H26 rather than relapse. The composition of our model shows a battle

between improving EHS and project-related spend vs. mortgage rates that are ticking up sequentially. We think the modest strength

should be viewed in the context of the easy compares at hand. Even mortgage rates at 6.5% are a y/y tailwind to the model,

speaking to the tough environment of a year ago. Existing home sales came in at +3.8% in May, which is the best absolute y/y

result since September of ’25. In May of last year, EHS saw just 0.5% growth, and May of the year prior actually turned in a near-

3% decline. The bar is low for growth, but it does make for optically better and nominally improving trends. Pending home sales (a

leading indicator for EHS) in May increased by 3.8% m/m and rose 4.8% y/y. All in all, we think the path for HI growth is likely

to remain uneven but biased better thanks to easy comparisons, price and mix all supporting a return to modest growth,

keeping us aligned with our +1% 2026 HI growth forecast.

What changed in the model? Housing turnover loosening up. Existing home sales for 1-family homes were 3.8mn SAAR, +4.1%

m/m and +3.8% y/y; a sharp 320bp sequential acceleration, potentially suggesting some consumers are adjusting to the new