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Mortgage rates remain unbearably high for most Americans, and many are staying put. But that doesn’t mean the home doesn’t need improvements or maintenance. And some homeowners, if they can’t move to a new home, are looking to make their old home “newer” with a new deck or walk-in closet.
Traditionally, a home equity loan or home equity line of credit has been the first tool you should use. But even those are becoming too expensive for homeowners. This effectively traps homeowners in dilapidated homes with no way to easily get out or make improvements.
And even when homeowners are leveraging home equity loans (homeowners originated nearly 20% more second mortgages, or HELOCs, in the second quarter of this year compared to the first quarter of this year), homeowners are likely not using that capital for improvements. Experts say they use them to stay afloat.
Americans own record amounts of undeveloped or expensive housing equity.
“As interest rates continue to rise, it will become increasingly more expensive for homeowners to tap into their home equity,” said Tom Graff, chief investment officer at financial planning and asset management firm Facet.
The fight is built into the rate hike, Graf said.
“The Fed is raising interest rates in an effort to control inflation, and one way that might be effective is to rein in consumer spending, so it’s by design that consumers will have a hard time financing large purchases,” he said.
But the Fed’s policies also come with risks to the consumer-driven economy.
“Consumer spending is already far behind as a driver of GDP growth,” Graf said.
He added that there is little buffer in the economy given the weak job market, declining wage growth, high gas and diesel prices, and net negative immigration.
The biggest economic driver today is data centers.
“Data center spending actually drives GDP growth and supports the economy. If it slows down even a little, the economy could easily slide into recession,” Graf added.
Unexpected 5-year extension of residence
Angie Hicks, co-founder and chief customer officer of home services marketplace Angie, which connects homeowners with contractors and other service professionals, said homeowners are holding off on large projects because HELOC and equity loan prices have become unaffordable.
Mr Hicks says people will continue to hold onto those 2-3% mortgage rates for as long as possible.
“And it never comes back. That 6 to 7 percent is a more normal range,” Hicks said.
Therefore, owners want to turn their “for now” home into a “forever home.”
“We’re seeing people stay in their homes about five years longer than expected,” Hicks said. “People are feeling the squeeze.”
Hicks said people are prioritizing furnace tune-ups and maintenance over major kitchen remodels.
“People don’t want to wake up on the coldest winter morning of the year and find their furnace isn’t working, so that’s why people are spending money on tune-ups,” Hicks said.
This is consumer behavior on par with other times of economic uncertainty.
“When inflation kicks in or there’s a shock to the economy, people don’t stop spending on their homes; they just change their spending priorities, like buying a water heater instead of a new deck,” Hicks said.
And when it comes to home improvements, people tend to tap into savings or tackle projects that are better done in stages, like landscaping.
According to Angi data, 60% of consumers are currently postponing projects and switching to maintenance.
Hicks says kitchens and bathrooms are the most popular projects, but there are many ways to give these spaces a fresh look without making expensive upgrades. She said new cabinets are the biggest expense in a kitchen remodel, so owners are considering replacing the handles or giving them a new coat of paint instead.
“This data shows that consumers are postponing large projects while staying at home,” said Philip Odelfelt, CEO of Datavations, a retail analytics firm that tracks in-store data for home improvement companies.
According to Databases, from September 2025 to August 2026, Home Depot and Lowe’s saw a 10% to 28% year-over-year decline in the high-end home improvement category.
Affordability remains a major concern, Lowe’s Chief Financial Officer Brandon Sink said in the home improvement chain’s latest earnings call, adding that “it has a large impact on repair and maintenance spending, the prioritization of projects that consumers are working on, and the continued vigilance against discretionary high ticket prices.”
One-year performance of Home Depot stock and Lowe’s stock.
Shower remodeling products were among the hardest hit. From September 2025 to August 2026, Home Depot and Lowe’s saw sales of shower stalls, kits and enclosures drop 21% year-over-year, with unit sales down an even steeper 28%, according to Databases. Bathtub sales fell by a smaller but still significant 10%, with units down 12%. Oderfeldt said this decline is seen at both retailers, not just one, so it’s not a fluke of one chain but indicative of a broader change in consumer behavior.
As the ticket size increases, the rate of decline also becomes steeper. The average selling price for shower stalls and kits is about $700, while bathtubs are about $309. Pull-down kitchen faucets, which have a much lower average selling price of $147, saw sales decline by about 3%.
“There is a clear gradient in our in-store data over the past 12 months,” Oderfelt said. “Lowest-priced items, such as kitchen faucets, are down just a few percentage points year-over-year. But the decline accelerates when you get into the $300 to $700 range, such as bathtubs and shower stalls. … Homeowners aren’t backing down on maintenance, but major renovation projects are being postponed.”
According to Databases, the surface-level numbers actually underestimate the backlash. Normalizing assortment changes over the past year, productivity by location has declined in nearly all renovation-related categories. Graf said sales of lower-priced maintenance items have been steady, which may be helping push the top line up, but per-store productivity is declining even as top-line sales appear flat. “Retailers are adding SKUs and distribution, masking the fact that customers are increasingly absent from bringing in renovation projects,” he added.
“I’m just waiting.”
Mark Latchford, a professor at Tulane University’s business school who studies consumer behavior related to home equity, said he finds that many people do the math in their heads, but wouldn’t do it if borrowing costs were that high. Mr. Latchford says he is one of those who is feeling the pain as a consumer.
“I need to renovate my kitchen, but with prices and interest rates, I can’t afford that. I just wait. That’s the whole housing market right now,” Mr Latchford said. “People ignore superficial improvements and only do the necessary work.”
The fixer-upper market also collapsed due to high borrowing costs.
“Five to 10 years ago, people were rebuilding houses, buying property, doing work, selling it for a profit, but that’s no longer the case. People don’t buy fixer-uppers anymore. The cost of borrowing and upgrading has become too high to do that,” Latchford said.
Even if consumers have access to home equity or a HELOC, they won’t put that money toward new cabinets. “When you’re using a home equity, HELOC, you’re not using it to improve your home, you’re using it to cover credit card debt,” Latchford said.
Andre Kazimierski, co-owner and president of HomeHero Roofing, sees homeowners struggle with a lack of liquidity and equity when making upgrades. Historically, it was very common for people to leverage their home equity to pay for major home renovations.
“As a roofing company, it has always been a very common occurrence for our customers to take out HELOCs or home equity loans to pay for reroofing,” Kazimierski said.
Major renovations, such as roof replacements, window replacements, and HVAC replacements, are among the types of projects that tend to be very expensive but are unavoidable. When people spend money, it’s often because that part of their home is reaching the end of its life and there are no other options.
“So when these unavoidable costs occur, many people don’t have the cash on hand to pay them right away, so they take advantage of leveraging their home equity. That said, major renovations may start to decline because people are struggling to do it right now,” Kazimierski said.
The lack of renovations will ease the pain for the DIY renovation market and professionals, and if this situation drags on, it could also ease the pain in a more permanent way for homeowners.
“We seem to be experiencing more and more extreme weather events each year, and many homes are dealing with high winds, heavy rain, and extreme temperatures. If needed renovations are postponed because people are unable to tap into their home equity and pay for them, homes become even more vulnerable to increasingly volatile weather, potentially resulting in costly damage that could have been avoided,” Kazimierski said.
The damage to the real estate market is more predictable.
“Discretionary capital projects are often the first to be postponed by both households and portfolio owners when access to equity becomes costly,” said Jenine Fallon, managing director of capital formation and investor relations at real estate capital advisory firm Praxis Rock Advisors. He added: “What does this mean for the broader housing economy if assets remain locked in for years? Sales will be lower, renovation costs will be lower, and it will be a market where existing owners simply hold without trading or making improvements.”
—CNBC’s Diana Orrick contributed to this report.
