Growth in residential remodeling spending is expected to slow considerably by the middle of next year, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that annual gains in homeowner expenditures for improvements and repairs will shrink from 6.3% in the current quarter to just 0.4% by the second quarter of 2020.
“Declining home sales and homebuilding activity coupled with slower gains in permitting for improvement projects will put the brakes on remodeling growth over the coming year,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “However, if falling mortgage interest rates continue to incentivize home sales, refinancing, and ultimately remodeling activity, the slowdown may soften some.”
Abbe Will, associate project director in the Remodeling Futures Program at the Center, adds, “With the release of new benchmark data from the American Housing Survey, we’ve also lowered our projection for market size about 6% to $323 billion. Spending in 2016 and 2017 was not nearly as robust as expected, growing only 5.4% over these two years compared to 11.9% as estimated.”
More information about the newly released benchmark data and changes to the projected LIRA market size can be found here.