JCHS expects sharp dropoff in remodeling and repair spending
Home improvement spending is expected to decline sharply next year, according to The Remodeling Futures Program at the Joint Center of Housing Studies of Harvard University
The latest Leading Indicator of Remodeling Activity (LIRA), released today, projects year-over-year growth in remodeling and repair activity to decline from 16.1% in 2022 to 6.5% by the third quarter of 2023.
“Housing and remodeling markets are undoubtedly slowing from the exceptionally high and unsustainable growth rates that followed in the wake of the pandemic-induced recession,” said Carlos Martín, project director of the Remodeling Futures Program at the Center. “Spending for home improvements will continue to face headwinds from declining home sales, rising interest rates, and the increasing costs of contractor labor and building materials.”
LIRA provides a short-term outlook of national home improvement and repair spending to owner-occupied homes.
The indicator, measured as an annual rate-of-change of its components, is designed to project the annual rate of change in spending for the current quarter and subsequent four quarters, and is intended to help identify future turning points in the business cycle of the home improvement and repair industry.
Click here to read the latest full report from the JCHS.
“Although remodeling market gains are expected to cool significantly next year, homeowners still have record levels of home equity to support financing of renovations,” said Abbe Will, associate project director of the Remodeling Futures Program. “Energy-efficiency retrofits incentivized by the Inflation Reduction Act of 2022, as well as disaster repairs and mitigation projects following Hurricane Ian will further support expansion of the home remodeling market to almost $450 billion in 2023.”
The LIRA is released in the third week after each quarter’s closing. The next LIRA release date is Jan. 19, 2023.