Next Year to Challenge Remodeling, Says Harvard

The annual rate of owner spending on home updates and maintenance will decline through the third quarter of 2024, predicts Harvard University’s Joint Center for Housing Studies (JCHS).

“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,” said Abbe Will, associate project director of the Remodeling Futures Program at JCHS, in the official release. “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.”

The report predicts a negative 7.7% fourth quarter moving rate of change for the third quarter of 2024. The moving four-quarter rate of change produced by the LIRA is the rate of change in national spending in any given four-quarter period to the spending that occurred in the four quarters prior to that period.

“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.” 

Anecdotally, many remodelers have shared a softening in leads and decreasing backlogs, but continued work and a return to pre-pandemic levels in the current quarter. These predictions reveal greater economic impact on homeowners in 2024.

The prediction comes from JCHS’s Leading Indicator of Remodeling Activity (LIRA). The university provides short-term outlook by analyzing eight indicators: the gross domestic product, existing single-family home sales, single-family housing starts, the S&P CoreLogic Case-Shiller National Home Price Index, existing single-family median sales prices, remodeling permits, The Conference Board’s Leading Economic Index, and retail sales of building materials.