JCHS: Larger slowdown in repair and remodeling expected
Spending on home improvement projects and repairs is expected to decrease at a “moderate rate,” according to the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.
The latest Leading Indicator of Remodeling Activity (LIRA) forecasts annual owner expenditures for home updates and maintenance to decline by 7.7% through the third quarter of 2024.
“The ongoing weakness in the housing market caused by high interest rates and low supply of existing homes is expected to weigh on remodeling activity next year,” said Carlos Martín, project director of the Remodeling Futures Program at the Center. “Homeowner concerns about the health and direction of the broader economy may also dampen plans for remodeling projects.”
LIRA provides a short-term outlook of national home improvement and repair spending to owner-occupied homes.
This is an increased slowdown than what was projected in the previous LIRA released in July.
At that time, the JCHS said year-over-year spending would shrink by 2.7% through the first quarter of next year and by 5.9% through the second quarter, following a slowdown in growth that began in the final quarter of 2022.
“The level of annual spending on improvements and repairs is projected to fall from $489 billion today to $452 billion over the coming four quarters,” says Abbe Will, associate project director of the Remodeling Futures Program. “While the rate of market decline should decelerate significantly in the second part of the year, 2024 is shaping up to be a challenging year for home remodeling.”
During a live webinar hosted last month by the National Lumber and Building Material Dealers Association (NLBMDA), John Burns Research and Consulting representatives said a remodeling and repair surge is a few years away.
With 24 million homes reaching “prime remodeling years” by 2027, spending could see a jump given that 85% of homeowners are currently locked into rates below 5%. At the same time, those same homeowners have an average equity of about $333,000, providing leverage for borrowing.
Earlier this month, the National Association of Home Builders reported that remodeler confidence decreased in the third quarter, the National Association of Home Builders reported that remodeler confidence declined in the third quarter.
The latest NAHB/Westlake Royal Remodeling Market Index (RMI) posted a reading of 65, falling three points compared to the previous quarter.
Additionally, the latest RMI's Current Conditions Index averaged 72, falling 5 points compared the previous quarter.
