The 2026 Home Renovation ROI Report: What Actually Adds Value?

For home owners in 2026, making home renovation decisions can often be a matter of balancing personal needs with financial realities. In assessing Return on Investment, however, it is crucial to note that all renovation projects have different values.

At JBL Construct LLC, we believe in building with purpose. To help you in making the best possible decision, we have looked beyond personal experience and compiled a list strictly for the purpose of providing information based solely on factual data gathered through the National Association of the Remodeling Industry, the National Association of Realtors, the National Association of Home Builders, and government energy studies.

Here is the research-backed list of renovations that statistically increase home value.

The Exterior: Unmatched Financial Returns

According to the latest industry reports, exterior projects related to curb appeal return a higher percentage of cost recovery compared to interior renovations. This is primarily because these projects preserve the structural integrity of the asset while giving it a renewed aesthetic.

1. Garage Door Replacement
   • The Data: Often, this particular upgrade results in return on investment. Recent data, as pointed out by NARI, shows that the return on investment for replacing the garage doors can easily regain a large percentage of the expense, in some cases well over 200 percent, due to the relatively low cost yet high visibility. (Ref: NARI: Exterior Upgrades With High ROI)
   • The Logic: The garage door can be considered to contribute up to 30% to the overall façade of the home when viewed from the street. Upgrading from an old or damaged garage door to an insulated one will therefore increase the perceived value of the home. (Ref: NARI: Exterior Upgrades With High ROI)
2. Steel Entry Door Replacement
   • The Data: Installing a steel entry door directly following the installation of garage doors is an investment at its best. Information reported from the National Association of the Remodeling Industry (NARI) suggests that cost recovery on this type of investment can exceed 200% and is one of the few projects that will put money back in your pocket. (Ref: NARI: Exterior Upgrades With High ROI)
   • The Logic: A steel door offers better security, energy efficiency, and durability over a wood door. It gives the message to the prospective buyers that the house is safe.

Interior Strategy: The Value of Flooring and Function

Although interior luxury renovations may be desirable, the results show that basic renovations, and more specifically flooring, provide the greatest financial safety net.

1. Hardwood Flooring (Refinish & New)
   • The Data: According to the National Association of Realtors (NAR) Remodeling Impact Report, there is no question about this: refinish hardwood floors, and you recoup 147% of the cost; install new wood flooring, and you recoup 118% of the cost. (Ref: National Association of Realtors)
   • The Logic: Hardwood flooring is a “lifetime” quality. This is in contrast to the association that is made between carpeting, which is linked to liability, and hardwood flooring, which is linked to cleanliness, durability, and quality.
2. Kitchen & Bath Upgrades
   • The Data: Kitchen and bathroom renovations are once again the most sought-after projects, although “minor” renovations, which may involve surface and hardware upgrades, can provide greater percentage returns on investment, according to the National Association of Home Builders (NAHB). Statistics provided through the National Association of Realtors (NAR) would suggest a Joy Score of 9.8 out of 10 with respect to kitchen renovations, indicating high lifestyle returns despite lower returns on investment compared with exterior renovations. (Ref: National Association of Realtors – Remodeling Impact)
   • The Logic: Minor renovation work is done to give the house a new look without having to undertake the full process of moving plumbing and electrical wires, which is quite costly.
3. Bathroom Addition
   • The Data: For those homes that need additional functional space, the addition of a bathroom would be an intelligent strategic move. According to NAR’s research on home remodeling, the addition of a bathroom can recover as much as 56 percent of the investment at resale, but more importantly, it can broaden the potential pool of buyers by solving issues of functional obsolescence. (Ref: National Association of Realtors – 12 Remodeling Projects That Offer the Best Value at Resale)

Expanding the Footprint: Equity Through Space

In markets where costs per square foot are relatively higher, the maximization of the usable space becomes a major contributor to equity.

1. Finished Basement
   • The Data: Converting the basement into livable space ranks as one of the most affordable ways to grow home square footage. According to the NAR, the cost can be recovered up to 71 percent through resale. Moreover, it Achieves an impressive Joy Score of 8.8/10, indicating it delivers significant gain in terms of “equity” & lifestyle improvement. (Ref: National Association of Realtors – Remodeling Impact) 
   • The Logic: The cost of finishing a basement is significantly lower than that of an addition, since the shell of the house already exists. It will give you the flexible space that today’s buyers desire: gym, office, playroom, etc.
2. Accessory Dwelling Units (ADUs)
   • The Data: ADUs (detached structures or basement apartments) are a transformative trend. Freddie Mac and the Department of Housing and Urban Development (HUD) updated their guidelines to include ADU rental income for mortgage qualification purposes. This appears to be a significant shift in the valuation of ADUs.
   • The Logic: The ADU redefines a home as no longer a mere liability, but an income-producing asset. The ADU also addresses the need for intergenerational housing, which was named by the National Association of Realtors as a “Top Priority for 2026 Buyers Seeking Space for Aging Parents or Adult Children.” (Ref: Freddie Mac – Accessory Dwelling Units) 

Systems and Efficiency: The Invisible Value

Cost of Ownership, which includes mortgage payments as well as utilities, is a major selling feature of a residence as of 2026. Energy retrofits have been made economically feasible through federal incentives.

1. Windows, Doors, and Insulation
   • The Data: Replacing single-pane windows with ENERGY STAR-rated windows could cut energy use in homes by an average of 12%. In addition, such home upgrades often offer tax credits. (Ref: Energy star) 
2. HVAC Conversion & Electrification
   • A home’s Total Cost of Ownership (which includes mortgage payments and utility bills) is a key marketing benefit in the year 2026. Modernization of a home’s mechanical systems is not only beneficial for its inhabitants but is also very profitable when the home is resold.
   • The Data: Installing a modern and efficient heating and cooling system, such as a heat pump, becomes increasingly attractive. Industry statistics indicate that electrification of HVAC systems can generate a savings of 66 to 72 percent of the cost of the upgrade at the time of resale.
   • The Logic: Consumers are nervous about the old mechanical systems, which are at risk of failing just a short time after the sale. A brand-new mechanical system removes the “risk discount” from the offer.
   • The Incentives: Under the Inflation Reduction Act, homeowners are allowed to take a maximum of $2,000 annually in the form of tax credits for heat pumps and biomass stoves. This reduces the cost of installation while making the house more marketable. (Ref: Energy Star – Federal tax credits for energy efficiency)
     

Strategic Appraisals: How Value is Defined

It is important to understand how the appraiser views your renovation. Cost is not the end goal but rather how the market views the value of the renovations.

The Appraisal Perspective: As The Appraisal Institute states, home renovations that can improve the home’s exterior can have the greatest effect by alleviating buyer hesitation. However, improvements beyond the norm for the neighborhood can have a disproportionate return on investment. (Ref: Appraisal Institute – Potentially Increase Your Home’s Value)

The “Joy Score”: When to Ignore ROI

Although financial ROI is very important, a “Joy Score,” rated on a scale of 1 to 10 to denote a level of happiness that a home renovation will bring to its owner, is also used by the National Association of Realtors.

Perfect 10 Joy Scores: Kitchen Upgrades, Closet Renovations, and Roofing.

The Takeaway: If you are going to be in the house for 5+ years, then these “low ROI” projects are worth the investment, as the dividend you receive is the quality of life you enjoy on a daily basis.

Conclusion

Smart renovation means making sure your budget makes sense with the realities of the marketplace and using the factors of the joy score to measure this. When you look at the statistics available to you through the government and trade organizations, you can see the benefits of renovating doors and windows, adding living spaces such as basements and ADUs, and using tax credits for things such as energy.

However, the home that you live in is not just about the returns on your investment; it’s also about making memories and sharing joy and happiness with your family.

At JBL Construct LLC, we specialize in executing these high-value projects with precision. Contact us today to discuss how we can build equity into your home.

Ready to start your project? Contact us today to discuss your home’s potential.