Home Renovation Plans Hold Steady Despite Affordability Hurdles

U.S. homeowners continue to move forward with renovation projects despite persistent affordability challenges, prioritizing functionality and flexibility over resale value, according to a new report from Block Renovation.

The company’s “How America Renovates 2026” report — which is based on an online survey of 1,059 U.S. homeowners conducted between Feb. 19 and March 4, 2026 — found that 42% of homeowners say economic conditions, such as inflation and elevated interest rates, have influenced their renovation plans.

Despite the barriers, most are choosing to proceed. About 38% of respondents said they would absorb higher costs and stay on track, compared with 9% who would scale back projects and 8% who would pause them.

Renovations are largely being funded out of pocket, with 70% of projects financed through personal savings, underscoring what the report describes as a disciplined approach to home improvement spending.

Functionality is the primary driver behind renovation activity, with 68% of homeowners saying they are renovating to make their homes more livable, reflecting broader shifts in household composition.

Block Renovation CEO Julie Kheyfets said in an interview with HousingWire that the lock-in effect is driving homeowners to renovate their homes to meet their changing needs.

“Certainly, mortgage rates influence the market, and they determine how much people can move and buy new homes, which they renovate,” she said. “But another thing that’s a real secular factor, separate from mortgage rates, is just the shortage of housing supply in the country. It’s really challenging to build new homes in the United States. A lot of that is regulatory red tape.”

“A lot of people are priced out of buying a new home, not just because of mortgage rates, but also just because there’s not enough inventory … so what that means is more people have to renovate, especially as their families evolve,” Kheyfets added.

As a result, more than one in five respondents reported living in multigenerational households with two or more adult generations under one roof. “Four times as many Americans live in multigenerational households today as did 50 years ago,” Kheyfets said.

That shift is also fueling interest in accessory dwelling units (ADUs), with 17% of homeowners saying they are considering or actively planning to build an ADU. Of these respondents, 39% indicated the space would be used to support family care, such as housing relatives or caregivers.

Kheyfets said the reasons for having an ADU range from adult children not being able to afford their own homes or homeowners renting out the unit for extra income. These are more realistic goals given that state legislatures are beginning to override local regulations that made ADUs previously inaccessible to many homeowners.

While affordability remains a concern, the report found that trust has emerged as the biggest barrier to renovation. Thirty percent of respondents cited finding a reliable contractor as a key challenge, surpassing the 24% who pointed to high costs.

As a result, Block Renovation has created a vetted contractor network.

“This is a stranger you’re bringing into your home. They’re making your home a construction site. They’re around your kids, they’re around your family, and they’re in your home for months at a time,” Kheyfets said.

“We maintain a vetted network of contractors, and we vet them upfront. We only accept 7% of contractors who apply. … We also manage the network actively on an ongoing basis, so we can see all the work that they do [and] the quality of work. We can see how responsive and professional they are with our homeowners, and that also gives those contractors a strong incentive to do great work to receive more projects.”

Aside from finding trustworthy professionals, 20% of survey respondents said uncertainty around project pricing creates hesitation early in the process. Many are turning to artificial intelligence to get an accurate quote or assessment as nearly one-quarter of homeowners reported using AI tools, up from 9% a year earlier.

Adoption is particularly high among millennials, with 42% reporting usage. Among those who use AI, 84% said the tools influenced at least one renovation decision — most commonly in design, layout planning and cost estimation.

“For homeowners today, renovating is about adapting the home to real life,” Kheyfets said in a statement. “Americans are renovating to create more flexible, functional living arrangements, and they are increasingly turning to AI to manage the process.”