The cost of the materials that go into home renovations rose 6.6% year over year in the second quarter of 2026, well above the 3.9% increase recorded in the first quarter, according to a new index from the National Association of Home Builders.
The finding comes from NAHB economist Eric Lynch, who published the second-quarter remodeling update on the association’s Eye on Housing blog on Sept. 23. It is part of a quarterly update on remodeling labor and input prices that NAHB says will run between the releases of its Remodeling Market Index, a sentiment survey of remodelers, and its State Projections of Remodeling, which estimates spending by state.
A new index, and what it measures
The NAHB Remodeling Input Price Index, or RIPI, is a fixed-weight composite that tracks monthly price changes among nonlabor inputs used in residential improvements and in routine maintenance and repair. NAHB is careful about what it does not do: the index does not estimate the total cost of a remodeling project, and it is not a guide to what a remodeler should charge a customer. It measures the prices of a defined basket of inputs.
On that basis, remodelers’ input costs have now risen for 11 consecutive quarters. The 6.6% second-quarter increase sits above the 5.4% rise in final demand prices – the headline measure of what U.S. producers charge across the economy – but below the 7.8% increase the new residential construction sector absorbed over the same period β remodelers are being squeezed, in other words, but less severely than the firms building new houses. RealtyWire reported last month on NAHB survey data showing that the smallest builders were absorbing roughly five times the material cost increases the largest builders reported.
On our reading, the acceleration matters more than the level. A remodeler pricing work in the spring was quoting against costs rising at 3.9% a year; by the time that work was performed, the underlying inputs were climbing at nearly 7%. Fixed-price contracts signed months in advance absorb that difference out of the contractor’s margin.
Employment slips, real pay falls
The labor side of the update is softer. Seasonally adjusted employment of residential remodelers stood at 454,100 in the second quarter, down 5,100 from the first quarter and down 1.0% from a year earlier. The segment still employs more than 49% of all workers in residential building construction, and it remains more than 19% above its pre-pandemic level.
Average hourly earnings for residential remodelers were $37.91 in nominal terms in the second quarter, up 32 cents, or 0.8%, from the previous quarter. Year over year, wages rose 2.3% β faster than the residential building construction sector as a whole, but slower than both the consumer price index and the personal consumption expenditures price index, which is the Federal Reserve’s preferred inflation gauge. In real terms, NAHB notes, remodelers’ earnings are falling. That continues a pattern RealtyWire covered in NAHB’s broader residential construction wage data, where nominal gains have kept slowing while real pay turned negative.
Why NAHB is tracking this now
The association frames the new quarterly series as a response to remodeling’s growing share of residential construction. It cites three structural supports: an aging housing stock, the preference among older owners to age in place rather than move, and record-high housing wealth that gives owners equity to spend on the homes they already have.
Those tailwinds have a less comfortable counterpart. Mortgage rates this week reached their highest level since May 2024, and on our reading the same lock-in that keeps owners from listing also delivers the remodeling industry a captive market: an owner who will not trade a 4% mortgage for a 7% one renovates instead. Remodeling activity is concentrated accordingly: NAHB’s state-level projections show California, Texas and Florida alone accounting for more than 20% of U.S. remodeling spending.
The combination the second-quarter data describes β accelerating input costs, a shrinking workforce and falling real wages β does not point toward cheaper renovation work in the months ahead. NAHB says it will update the series each quarter.
