Citi explains why home improvement stocks are lagging in 2026

Investing.com -- Uncertainty around interest rates, energy costs, housing affordability, and geopolitics is weighing on the U.S. home improvement industry and its stocks in 2026, Citi analysts said after attending the HIRI Home Improvement Insights Summit. Before you buy NVIDIA: our AI model's stock picks are beating the market by 120%+. See the list now » Economists participating in the summit broadly expect home improvement demand to remain flat over the next 12 months. Higher rates and weak housing affordability remain key constraints, offset partly by resilient consumers, a stable jobs market and household wealth. Mortgage rates remain a major hurdle. HIRI survey data indicated that rates in the 5% range could be an important psychological threshold for homeowners considering moving from existing mortgages. About 80% of homeowners with mortgages currently have rates below 6%, and half have rates below 4%. Project delays are also weighing on demand. A homeowner survey found roughly one-third of projects are currently being delayed or cancelled. A separate contractor survey showed 60% of professionals had experienced at least one cancelled project, a substantial increase from last year. Not finding the right stocks? Our AI's list of investor-grade stock picks for October just dropped » Economic conditions and inflation were frequently cited as reasons. Projects proceeding are increasingly focused on maintenance and repairs, with some also being scaled down to meet tighter budgets. Longer-term industry fundamentals remain supportive. Americans now remain in their homes for an average of 10 to 11 years, compared with roughly seven to eight years previously. The average U.S. housing stock is 44 years old, creating growing maintenance requirements. Homeowners also hold about $450,000 in average household equity, providing a potential source of spending capacity. The U.S. has experienced roughly two decades of underbuilding in single-family homes, according to an economist from the National Association of Home Builders. Artificial intelligence could reduce friction for retailers and contractors. Lowe's technology chief said its strategy centres on augmenting employees rather than replacing them, with potential efficiency gains also available in contractors' back-office operations. Recent weakness in home improvement stocks suggests investors are pricing in the possibility that sluggish industry growth extends into 2027. Original Article Citi explains why home improvement stocks are lagging in 2026 AI deal boom drives Hong Kong fundraising to record summer - Bloomberg How Muse Stacks up Vs. OpenAI Dots View Comments