High mortgage rates are trapping homeowners in place, and making renovations harder to afford

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With mortgage rates continuing to stay untenably high for most Americans, many are staying put. But that doesn't mean homes don't need improving and upkeep. And some homeowners figure that if they can't move into a new home, they'll make their old home "newer" — a new deck or perhaps a walk-in closet.
Traditionally, a home equity loan or home equity line of credit would be the first tool to reach for. But even those are getting too expensive for homeowners. This leaves homeowners effectively trapped in aging homes with no easy way out, or way to improve them.
And even when homeowners are tapping into home equity loans — homeowners did originate nearly 20% more second mortgages or HELOCs in the second quarter of this year compared with the first quarter — they likely aren't using the equity for improvements. Experts say they are using them to stay afloat.
Untapped or expensive, Americans are sitting on a record amount of home equity.
"As rates keep rising, tapping into home equity will become more and more expensive for homeowners. This will generally hold back consumer spending, but it will hit big-ticket items, like home renovations, particularly hard," said Tom Graff, chief investment officer of Facet, a financial planning and wealth management firm.
This struggle is something built into the rate hikes, according to Graff.
"The Fed is hiking interest rates in an attempt to control inflation. One of the ways that is supposed to work is by pushing down consumer spending. So the fact that consumers will struggle to finance large purchases is by design," he said.
But the Fed policy also comes with risks for a consumer-driven economy.
"Consumer spending is already lagging way behind as a driver of GDP growth," Graff said.
And he added there is little cushion in the economy, given the soft jobs market, wage growth that has been declining, high gas — as well as diesel — prices, and net negative immigration.
The biggest economic driver right now is data centers.
"Spending on data centers is really driving GDP growth and holding the economy together. If that were to slow even mildly, the economy could easily fall into recession," Graff added.
An unexpected five-year extended residence
Angie Hicks, co-founder and chief customer officer of Angi, the home services marketplace that connects homeowners with contractors and other service professionals, says homeowners are holding back on big projects as HELOCs and equity loans get priced out of reach.
Hicks says that people are going to hold on to that two to three percent mortgage rate as long as they can.
"And it's never coming back, this six to seven percent is a more normal range," Hicks said.
So that has owners wanting to turn their home "for right now" into a "forever home."
"We are seeing people living in their houses about five years longer than they thought," Hicks said. "People are feeling a squeeze."
Hicks says people are prioritizing maintenance, doing a furnace tune-up rather than a major kitchen remodel.
"You don't want to wake up on the coldest morning of the year in the winter to a furnace that doesn't work, so people are spending for the tune-up," Hicks said.
This is consumer behavior that is on par with other times of economic angst.
"When inflation kicks in or there is a shock to the economy, people don't stop spending on their homes, they just reprioritize what they are spending on, for instance, a water heater instead of a new deck," Hicks said.
And when it comes to home improvement, people tend to tap into savings or take on projects, like landscaping, that lend themselves to being done in phases.
Angi data shows 60 percent of consumers are now putting off projects and switching to maintenance.
Kitchens and bathrooms are the most popular projects, but there are lots of ways those spaces can be given a fresh look, according to Hicks, without the big-ticket upgrades. She says new cabinetry is the biggest cost of a kitchen remodel, so owners are looking at swapping out the handles or applying new coats of paint instead.
"The data points to a consumer who is staying in their home but deferring major projects," said Philip Odelfelt, CEO of Datavations, a retail analytics firm that tracks point-of-sale data for home improvement manufacturers.
From September 2025 through August 2026, big-ticket renovation categories declined in a range of 10% to 28% at Home Depot and Lowe's compared with the prior year, according to Datavations.
Lowe's CFO Brandon Sink said on the home improvement chain's most recent earnings call that affordability remains a major concern, and he added that it is "really translating to prioritization of repair and maintenance spend and the projects that our consumers are engaging in, and this ongoing trend of caution around big ticket discretionary."
Shower remodel products were among the hardest hit. From September 2025 through August 2026, sales of shower stalls, kits, and enclosures fell 21% at Home Depot and Lowe's compared to the same period a year earlier, with unit sales down even more sharply, 28%, according to Datavations. Bathtub sales dropped a smaller but still notable 10%, with units down 12%. Because the declines show up at both retailers, not just one, Odelfelt said it points to a broader shift in consumer behavior, not a one-chain fluke.
The decline also steepens as ticket size rises. Shower stalls and kits average roughly $700 in sales price, while bathtubs are roughly $309. Pull-down kitchen faucets, with a much lower $147 average selling price, have seen sales decline about 3%.
"There's a clear gradient in our in-store data from the past twelve months," Odelfelt said. "Lower-ticket items like kitchen faucets ... are down just a few percent year-over-year. But as you move into the $300-to-$700 range — bathtubs, shower stalls — declines accelerate. ... Homeowners aren't pulling back on maintenance, but the bigger renovation projects are getting deferred."
The surface-level numbers actually understate the pullback, according to Datavations. Normalizing for assortment changes over the past year, per-location productivity is declining across nearly every renovation-related category. Lower-ticket maintenance items have held steadier in sales, which can help to prop up the top line, but the per-store productivity weakened even where top-line sales looked flat, Graff said. "Retailers are adding SKUs and distribution, which masks the fact that the customer walking in with a renovation project is increasingly absent," he added.
'I'll just wait.'
Mark Ratchford, a business school professor at Tulane University who studies consumer behavior related to home equity, says that a lot of people are doing the calculation in their head, and they are noting that if the cost of borrowing is that high, they just won't do it. Ratchford says he is among those now feeling the pain as a consumer.
"I need to remodel my kitchen, but when I look at the price and the interest rates, I can't afford that. I'll just wait, that is the whole housing market now," Ratchford said. "People are skipping cosmetic improvements and only doing the work they need to do."
The high cost of borrowing has squashed the fixer-upper market too.
"Five to 10 years ago, people would flip houses, they would buy properties, do the work and then sell it for a profit, but that is less of a thing now. People are not buying fixer-uppers. The cost of borrowing and doing upgrades has gotten so high they can't do it," Ratchford said.
Even when consumers do have home equity or HELOCs available, they aren't pouring that money into new cabinets. "If you are using home equity, HELOCs, you are not using it for home improvements, you are using it to cover credit card debt," Ratchford said.
Andre Kazimierski, co-owner and president of HomeHero Roofing, is seeing firsthand the lack of liquidity and equity that homeowners are battling when trying to make upgrades. Historically, it's been very common for people to tap into their home equity to pay for major home renovations.
"As a roofing company, it's always been a very common occurrence for our customers to utilize HELOCs or home equity loans to pay for roof replacements," Kazimierski said.
Major renovations like roof replacements, window replacements, and HVAC replacements are among the kinds of projects that tend to be very expensive yet unavoidable. When people spend, it is often because they have no other choice as those parts of their home reach the end of their lifespan.
"So, when those unavoidable costs come up, many people don't have the cash on hand to pay for them outright, which is why they'll take advantage of tapping into their home equity. All that to say, with people struggling to be able to do this now, we could start to see a decline in major renovations," Kazimierski said.
The lack of renovations will mete out pain to the DIY renovations market and pros, and if the situation lasts too long, also potentially to the homeowners in more lasting ways.
"As each year passes we seem to encounter more and more extreme weather, so lots of homes are dealing with things like high winds, heavy rain, and extreme temperatures. If necessary renovations are put off because people are unable to tap into their home equity to pay for them, that could leave homes even more vulnerable to increasingly volatile weather, potentially resulting in avoidable, costly damage," Kazimierski said.
The damage to the real estate market is more predictable.
"When tapping equity gets expensive, discretionary capital projects are often the first thing deferred, both for households and for owners managing a portfolio," said Genine Fallon, managing director of capital formation and investor relations at Praxis Rock Advisors, a real estate capital advisory firm. "What this means for the broader housing economy if that equity stays locked up for years: less turnover, less renovation spend, and a market where existing owners simply hold rather than transact or improve," he added.
—CNBC's Diana Olick contributed to this report.

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