Remodeling Spending to Decline at Faster Rate, Says Harvard
Harvard predicts annual homeowner spending on home repair and improvements to decline into 2024, according to the university’s Joint Center for Housing Studies’ (JCHS) Remodeling Futures Program.
Remodeling spending could drop by 2.7% in the first quarter of 2024, then by 5.9% the second quarter, continuing a decline beginning in quarter four of 2022, according to the Program’s LIRA report. This marks the first time national spending could decrease, rather than soften, in the past two years. Harvard says the decline comes at an accelerated rate through the first half of 2024.
The Leading Indicator of Remodeling Activity (LIRA) releases quarterly, providing a short-term outlook on national remodeling spending on owner-occupied housing. LIRA projects the annual rate of change in spending for both professional and do-it-yourself projects. It gathers data from building materials sales, existing single-family home sales, The Conference Board’s Leading Economic Index, housing starts, and more.
Remodeling Futures Program officials say the slow housing market will pull back spending, in addition to the fearful pullback from homeowners. But those threats to spending could be slightly eased by the number of remodeling permits and retrofit incentives.
“Homeowner improvement and maintenance spending is expected to top out at $458 billion in the coming year, compared with market spending of $471 billion over the past four quarters,” says Abbe Will, Associate Project Director of the Remodeling Futures Program. “However, strong and steady growth in the number of homes permitted for remodeling projects, as well as a slew of federal incentives for energy-efficiency retrofits may yet buoy remodeling expenditure from steeper declines.”
The last time annual spending dropped was the second quarter of 2020, dipping slightly from $334 billion to $331 billion before riding strong increases through 2023. The most recent LIRA prediction anticipates a change from $484 billion in quarter four of 2023 to $457 billion in the first and second quarter of 2024.
