During the first three months of 2026, the pace of growth in home repair, renovation and remodeling costs eased from year-ago levels. But new data indicates a notable quarterly rise amid accelerating inflation pressures.

Prices for materials and labor needed for projects like painting home exteriors and remodeling bathrooms increased about 2.54% from a year ago in the first quarter, slower than the yearly pace of 2.71% the prior quarter, according to Verisk Analytics.

But in its updated Repair and Remodel Index released Thursday, the property analytics firm also reported that a quarter-over-quarter increase of 0.74% well outpaced the 0.47% quarterly rise at the end of 2025.

Costs rose more quickly on a quarterly basis in all nine U.S. census regions compared to the previous quarter. The largest regional increases occurred in the West North Central region, which posted 0.93% growth, while the smallest increase emerged in the East North Central region, which rose 0.62% over the quarter.

“Just as inflation has risen since the beginning of the war in Iran, it seems likely that we will see repair and remodeling costs go higher as well,” noted Greg Pyne, vice president of pricing for Verisk Property Estimating Solutions, a division of Verisk Analytics, in the report.

The period tracked by the index ended March 31, at the conclusion of the first full month of the Iran war that started on Feb. 28.

With renewed demand headwinds and margin pressures on home builders likely to drive a consecutive year of declines in new-home construction in 2026, the renovation sector has broadly held as a lingering bright spot in the residential construction sector.

Annual growth in repair and remodeling costs was below the pace of growth in the consumer price index (CPI) in the first quarter, which rose 2.4% annually in February and January before spiking to 3.3% in March, according to the Bureau of Labor Statistics (BLS).

But deepening global energy shocks and subsequent trade disruptions pushed the CPI to 3.8% in April, its highest level since May 2023.

With the unresolved Iran conflict now in its fourth month, Pyne warned that “higher oil prices may increase the price of products and materials, as well as the cost of transporting of those goods, in the months ahead.”

That sentiment tracks with a broader deterioration in real estate investor outlooks this spring that point to “growing concern about near-term housing market conditions,” noted in investor sentiment survey findings published by RCN Capital in early May.

Ultimately, the current market shock is only the latest to undercut the home renovation sector, with pressures stemming from labor shortages and supply-chain disruptions during the COVID-19 pandemic having only just abated over the past two years.

A well-documented shortage of single-family homes and an ever-expanding volume of aging housing stock has stretched a demand pipeline for remodelers and fix-and-flip home investors well into the future.

But executing repairs and returning homes to the market at affordable price points remained a challenge last year as fix-and-flip investors were bleeding profitability, experts tell Scotsman Guide.

Pyne’s projection that additional cost pressures for the repair and remodeling sector lie ahead are further supported by a four-year high in wholesale inflation in April.

The producer price index (PPI) — by which the BLS tracks price changes across the supply chain — surged 6% in the second month of the war, offering a forward-looking signal on upcoming price changes in the CPI.

In the first quarter, however, Verisk noted that labor costs continued to account for roughly two-thirds of typical project costs, as deepening effects of second-quarter Iran war pressures are not reflected in the index covering January through March.

Quarterly costs increased across all 50 states including Washington, D.C., led by 2.45% growth in Rhode Island, 2.05% growth in Kansas, and a 1.27% increase in Oregon. Georgia, Connecticut and Vermont posted the smallest quarterly increases, rising just 0.26%, 0.27% and 0.36%, respectively.