Americans are spending record amounts on home upgrades, and it is paying off in rising property values. Steward Partners Global Advisory executive managing director Eric Beiley confirmed on Fox Business’ The Claman Countdown1 that the renovation surge is “boosting home values and creating opportunities for insurers.”1 But this wave of remodeling is also quietly reshaping the insurance industry, changing how carriers price risk and how homeowners protect their biggest investment.
Why Homeowners Are Renovating Instead of Selling
The math is simple for millions of Americans. Millions of homeowners who locked in mortgage rates below 3% during the pandemic-era boom have been reluctant to sell, knowing that any move would likely mean trading a historically low monthly payment for a far more expensive one.2
U.S. mortgage rates are expected to hover near 6.3% in 2026, according to Realtor.com chief economist Danielle Hale, and Redfin also projects 30-year fixed rates will average 6.3%.3 That gap between old and new rates keeps many owners rooted in place.
Instead of buying their next home, they are rebuilding the one they have.
Aesthetics (19%) and comfort/livability (18%) outweigh resale value (8%) as renovation drivers,4 according to the 2026 State of American Home Renovation report. 65% of homeowners completed a project in the past year, with painting (43%), outdoor living (39%), bathroom remodels (38%), and landscaping (34%) being the most common projects.4
John Sivori, vice president of consumer financing at Great Day Improvements, summed up the mood: “Against the backdrop of high mortgage rates, affordability challenges, and limited housing inventory, many Americans are choosing to improve the homes they already own.”4
home renovation boom property values insurance impact 2026
Renovation Spending Set to Hit Record Levels in 2026
The numbers tell a striking story. Annual spending on home improvements and maintenance is projected to rise steadily, reaching a record $526 billion by the first quarter of 2026, according to the latest Leading Indicator of Remodeling Activity (LIRA) from the Joint Center for Housing Studies.5
The LIRA projects that year-over-year spending on home renovation and repair will rise by 2.4% in early 2026 before easing to 1.9% in the third quarter.6
Here is a snapshot of where this money is going:
| Category | Key Trend |
|---|---|
| Kitchens | Minor updates deliver the highest ROI for boosting sale price |
| Bathrooms | Full renovations with modern fixtures and spa features in high demand |
| Energy efficiency | Heat pumps, insulation, and smart thermostats gaining fast |
| Storm hardening | Impact windows, fortified roofs, and backup power growing in weather-prone areas |
| Outdoor living | Patios, landscaping, and indoor-outdoor design remain popular |
Home renovation costs climbed significantly in 2025, but not only because materials and labor were expensive. The bigger driver was scope: homeowners chose larger, more complex renovations.7
The National Association of Home Builders highlights shortages in carpenters, framers, masons, and concrete workers,8 which keeps labor tight and project timelines unpredictable.
Which Upgrades Deliver the Biggest Return on Investment
Not all renovations add the same value when it comes time to sell. The data is clear on which projects punch above their weight.
In 2025, garage door replacements continue to lead the pack in ROI, returning an impressive 268%, which is up 74% compared with 2024. This shows that even small exterior upgrades can have a massive impact on a home’s resale value.9
Refinishing wood floors is another standout. The renovation project with the highest potential ROI is refinishing wood floors. You can recoup 147% of the costs for this project.10
Homes with strong energy ratings can sell for 8 to 12% more, making this one of the smartest investments in 2026.11 With utility bills climbing across the country, buyers want homes that save them money every month.
Pro tip for homeowners: Focus on projects that check more than one box. A kitchen upgrade that is both visually modern and energy smart, or an attic conversion that adds livable space and improves insulation, tends to deliver the strongest returns.
Real estate pros call this the “neighborhood ceiling.” If homes in your area top out at $350,000, spending $80,000 on renovations to push yours to $400,000 likely won’t work.12 Always research your local market before committing to a big project.
How the Renovation Boom Is Reshaping Home Insurance
Here is the part most homeowners overlook. Every major upgrade changes what it would cost to rebuild your home, and that directly affects your insurance.
The average annual home insurance premium is projected to increase 4% to about $3,057 this year, after jumping 12% in 2025, according to Insurify.13 Renovation activity is one of the forces pushing those numbers higher.
Expanding your space with new square footage will most likely increase your home insurance premium as you will need more dwelling coverage.14 Kitchen and bathroom remodels with luxury fixtures also raise replacement costs.
But smart renovations can actually lower your premiums. In 2026, many insurers are finally rewarding “home hardening” and risk-reducing renovations with real savings, often in the range of 5 to 25% if you make the right upgrades.15
Here is what insurers want to see:
- Impact-resistant roofing (15 to 25% premium discount in hail-prone states)
- Smart water shut-off valves (can prevent burst-pipe claims and earn $50 to $150 annual credits)
- Updated electrical and plumbing systems (reduces fire and water damage risk)
- Monitored security and fire alarm systems
In 2026, insurance companies aren’t just raising rates; they are using satellite imagery and AI-driven risk modeling to identify “vulnerable” properties and drop them entirely.16 Homeowners who invest in resilience upgrades protect both their property value and their ability to stay insured.
According to a 2026 market study by the Insurance Institute for Business & Home Safety, homes with a FORTIFIED certification are 23% more likely to remain insurable after a major storm event.17
What Homeowners Should Do Before Starting a Remodel
Planning matters more than ever. Here are the steps every homeowner should take before picking up a hammer.
Notify your insurer first. Always discuss planned renovations before starting the project, and provide regular updates as work progresses.18 Waiting until after the work is done can leave dangerous gaps in coverage.
Document everything. Document upgrades with photos, permits, and receipts to support updated valuations.1 This paper trail protects you during insurance claims and when selling.
Think long term, not just cosmetic. Most homeowners are planning to spend less on dining, entertainment, vacations, and hobbies in 2026, but only about one quarter of households plan to spend less on home improvement activities. The majority of homeowners are prioritizing spending on home improvement above other discretionary categories.19
Redfin chief economist Daryl Fairweather notes that “renovations that create space for multiple generations are becoming increasingly common,”3 from garage conversions to separate suites for aging parents or adult children returning home.
The renovation boom is more than a trend. It is a response to a housing market that has forced Americans to rethink what home really means. With mortgage rates staying above 6%, millions of families are putting their money where they already live, building equity one kitchen, one bathroom, one fortified roof at a time. Whether you are planning a small refresh or a full remodel, the smartest move is to think of your home as both a place to live and an asset to protect. Tell us in the comments: what is the first renovation you would tackle in your home right now
