After more than a decade of continuous growth, annual spending on home improvements and repair is expected to decline by early next year, according to the Leading Indicator of Remodeling Activity (LIRA) released last week by Havard’s Joint Center for Housing Studies.
The LIRA projects that year-over-year spending on improvements and maintenance will decline by 2.8 percent through the first quarter of 2024.
“Higher interest rates and sharp downturns in homebuilding and existing home sales are driving our projections for sluggish remodeling activity next year,” says Carlos Martín, project director of the Remodeling Futures Program at the Center. “With ongoing uncertainty in financial markets and the threat of a recession, homeowners are increasingly likely to pare back or delay projects beyond necessary replacements and repairs.”
“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 LIRA provides a short-term outlook of improvement and repair spending to owner-occupied homes. The indicator is designed to project changes in spending for the current quarter and subsequent four quarters.
The LIRA is released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University in the third week after each quarter’s closing. The next LIRA release date is July 20, 2023.
For more information, please visit www.jchs.harvard.edu.
I understand the reasons for the reductions in remodeling jobs thruough 2024. What are some solutions for remodelers can take to offset this? Or do we cut back on overhead and labor?