Residential renovation expenditure

Residential renovation expenditure is projected to reach $52.5 billion in 2026, representing a 0.7% dip from the previous year and continuation of the weakness from the cyclical trough experienced in 2023. This performance leaves spending 18.3% below the 2021 pandemic-era peak of $64.3 billion and 8.3% below 2019 pre-pandemic levels, demonstrating that renovation activity hasn't recovered from the pandemic shock as elevated interest rates constrained homeowner budgets.

Price pressures continue to affect renovation budgets, though they have moderated from previous peaks. The Residential Renovation Price Index increased 2.1% from Q4 2024 to Q4 2025, with costs rising primarily for projects that require substantial concrete and wood materials, as tariff-related uncertainty drove input price volatility. Quebec experienced the largest regional cost increase at 4.7% year-over-year, while Ontario had the lowest change at 0.8% over the same period, reflecting divergent regional supply-demand dynamics.

The past five years witnessed strong volatility in renovation expenditure driven by pandemic disruptions and subsequent economic turbulence. Spending skyrocketed by 12.3% in 2021 to $64.3 billion, a record high, as homeowners restricted at home by work-from-home and pandemic mandates invested heavily in improving residential spaces. These purchases were driven by pandemic savings accumulation, government transfer payments and historically low interest rates.

This boom proved unsustainable once monetary tightening began, with spending declining 3.2% in 2022 and plummeting 12.3% in 2023 as rising borrowing costs, declining home equity and deteriorating consumer confidence constrained homeowner budgets for discretionary improvements. Recovery began tentatively in 2025 with 1.4% growth as interest rate cuts improved affordability, and aging housing stock increasingly required maintenance investments that could no longer be deferred. Elevated interest rates, high project costs and weak housing-market turnover make homeowners more cautious about taking on big, discretionary projects in 2026.