Uncertainty over interest rates, energy costs, housing affordability and geopolitics is pressuring the U.S. home improvement industry and its stocks in 2026, Citi analysts said after attending the HIRI Home Improvement Insights Summit. Economists at the summit broadly expect demand to remain flat over the next 12 months. Higher borrowing costs and weak housing affordability are key constraints, although resilient consumers, a stable jobs market and household wealth provide some support. Mortgage rates remain a major obstacle: HIRI survey data identified rates in the 5% range as a potential psychological threshold for homeowners considering a move, while about 80% of mortgage holders have rates below 6% and half have rates below 4%. Project delays are also reducing demand, with roughly one-third of homeowner projects delayed or canceled and 60% of contractors reporting at least one canceled project, up substantially from last year. Economic conditions and inflation were frequently cited as causes. Projects that proceed are increasingly concentrated on maintenance and repairs, with some reduced in scope to fit tighter budgets. Longer-term support comes from longer homeowner tenure, an aging housing stock, average household equity of about $450,000 and roughly two decades of underbuilding in single-family homes. Artificial intelligence could help retailers and contractors reduce operational friction, while Lowe's technology chief said the company's strategy focuses on augmenting employees rather than replacing them. Recent weakness in home improvement stocks indicates investors are considering whether sluggish growth could continue into 2027.