New construction often gets the cleanest smart home story, and rightfully so. It’s easier to imagine technology when the walls are open, the plans are still changing, and the project team can coordinate wiring, lighting, shading, racks, power, and control from the start. Not to mention, we’re often talking here about (and advocating for) integrators getting involved in projects much earlier.
But CEDIA’s 2026 U.S. Professional Smart Home Market Analysis suggests another story may be just as important: the luxury retrofit economy.
The report estimates the U.S. residential technology market at $33.8 billion and shows broad activity across myriad categories, including home networking, distributed audio, lighting and shading, integrated control systems, media rooms, dedicated home cinema, security, design services, outdoor AV, access control, and dedicated listening rooms. At the same time, the report’s macroeconomic appendix describes a housing market shaped by softening single-family starts, weak affordability, low mobility rates, and home improvement spending that remains heavily concentrated among higher-income households.
Put those pieces together, and a useful angle emerges for the custom integrator. There’s lots of business to be had among affluent homeowners looking to improve the homes they already own.
The Lock-In Effect
The report notes that low mortgage rates continue to contribute to low mobility. As of the end of March 2026, about 50 percent of homeowners with a mortgage had an interest rate below 4 percent, and 67 percent had a rate below 5 percent. At the same time, an estimated 30 percent to 40 percent of homeowners had no mortgage, an all-time high, giving that segment more flexibility and insulation from affordability concerns.
This creates a divided market. Many homeowners may be reluctant to move because their current financing is too attractive to give up. (Raises hand.) Others, especially mortgage-free or high-equity homeowners, may have the financial strength to improve or reposition their existing homes without moving.
In fact, over the summer it was reported that the amount of available home equity in the U.S. exceeded $18 trillion (with a T for the first time ever.
Just because mobility slows, that doesn’t mean the home improvement market disappears. Rather, it just changes shape. Homeowners who are not moving may instead look to invest in making their current homes work better for entertainment, wellness, security, remote work, aging in place, outdoor living, and everyday comfort.
All areas that custom integrators can have an impact.
Spending Concentrated at the Top
CEDIA’s appendix also includes home improvement spending data by income tier. The top 20 percent of household incomes consistently account for roughly half of all home improvement spending. In 2023, the top income segment represented 49 percent of home improvement spend, while the second tier represented 23 percent. Together, the top two income groups accounted for nearly three quarters of spending.
The report frames the point plainly: money did not leave; it is concentrated.
For integrators, designers, and builders, that concentration is important because the professional smart home market often depends on discretionary spending, complex project scopes, and clients with the ability to invest in quality-of-life improvements. Higher-income homeowners, put plainly, are more likely to be in the position to make these major upgrades to their existing lighting, shading, networking, outdoor AV, media rooms, security, access control, and dedicated entertainment spaces even when the broader housing market is under pressure.
That does not mean every opportunity is ultra-luxury. But it does suggest that firms serving higher-income homeowners may be better positioned than the general housing headlines imply.
Category Data Supports the Retrofit Story
Several of the report’s largest categories align naturally with existing-home upgrades. Home networking leads the market at $5.2 billion. Distributed audio is $3.8 billion. Lighting and shading are $3.7 billion. Integrated control systems are $3.1 billion, media rooms are $3.0 billion, dedicated home cinema is $2.8 billion, security systems are $2.6 billion, design services are $2.5 billion, recurring monthly revenue services are $2.4 billion, and outdoor AV entertainment systems are $2.0 billion.
These are not only new-home categories. Many are well suited to homeowners who want to make their current homes more functional and enjoyable.
A homeowner staying put may upgrade the network because the household is streaming, working, gaming, and running more connected devices. They may add lighting scenes and automated shades to improve comfort and energy performance. They may convert a room into a media space, improve outdoor entertainment, add surveillance, modernize access control, or begin paying for managed service because the home has become more technologically dependent.
That is the retrofit opportunity in practical terms: use technology to make an existing home live like a better version of itself.
Economic Caution Does Not Eliminate Demand
CEDIA’s report does not ignore market pressure. It notes that single-family starts are expected to decline in 2026, permits are declining, affordability remains difficult, builder confidence is weak, and contractors continue to face concerns around material costs, economic uncertainty, labor, tariffs, product availability, inflationary pressures, and interest rates.
Those conditions often indicate a slowdown in the number of projects, pressure on budgets, and a more selective client base.
But the smart home market data in the same report is notably optimistic. Nearly eight in 10 firms expect revenue growth over the next year, while only 4 percent expect a decline. Growing demand is the primary driver of expected revenue growth. Firms also identify lighting, AI integration, new products, networking partnerships, shades, home automation projects, and more clients as leading opportunities.
That combination of caution and optimism is exactly where the retrofit story fits. Clients may be more careful, but the right clients are still spending. Projects may be more selective, but the projects that move forward can be meaningful. New construction may soften, but existing homes remain a large installed base of opportunity.
So, What Now?
The luxury retrofit economy should push the industry to think beyond the blueprint.
Some of the most important smart home work over the next year may happen in homes that already have a design language, a family rhythm, and a set of constraints. The opportunity is to improve those homes without making technology feel like an intrusion.
For integrators, that means leading with outcomes, not gear lists. For designers and architects, it means involving technology professionals early enough to protect design intent and avoid avoidable compromises. For builders and remodelers, it means recognizing that connected systems are now part of how affluent homeowners define comfort, convenience, security, and long-term livability.
CEDIA’s 2026 data supports a more nuanced market view. The housing market may be difficult. New starts may be under pressure. But the professional smart home market is still large, optimistic, and increasingly tied to homeowners who want their current homes to work harder, feel better, and support how they live now.
That makes the existing luxury home one of the most important canvases for the integration market.
