flexiblefullpage - default
interstitial1 - interstitial
Currently Reading

Remodeling Spending to Soften

Advertisement
billboard -

Remodeling Spending to Soften

Experts from the Joint Center for Housing Studies of Harvard University project remodeling spending to slow down but ultimately stay strong 


By By James F. McClister October 22, 2018

Remodeling spending is likely to weaken next year, says the latest Leading Indicator of Remodeling Activity from the Joint Center for Housing Studies of Harvard University. But it will still be strong.

By year’s end, spending is expected to hit a peak year-over-year increase of 7.7 percent, putting total remodeling spending for 2018 at $337 billion––about $20 billion more than 2017. Moving into 2019, the rate of spending increase is expected to slow––first to 7.2%, then to 6.9%, and it will continue. Chris Herbert, managing director of the Joint Center for Housing Studies, likened in a statement the softening, but “otherwise very strong growth” to rising mortgage interest rates––now 5.1% for a 30-year fixed-rate mortgage (i.e., seven-year high)––and slow home sales. “Low for-sale inventories are presenting a headwind because home sales tend to spur investments in remodeling and repair both before a sale and in the years following.”

But even as the pace slackens, the gains will remain above average in 2019, predicted Abbe Will, associate project director in the Remodeling Futures Program at the Joint Center, in a statement. Other indicators, she explained, such as home prices, permit activity, and retails sales of building materials, are experiencing continued growth, and supporting remodeling spending. “Through the third quarter of 2019, annual expenditures for residential improvements and repairs by homeowners is still expected to grow to over $350 billion nationally.”

Past 2019, a Zillow forecast shows home price appreciation as continuing its upswing––a positive indicator for remodeling spending. But it also forecasts a likely recession––a prediction shared by several economists. In a survey of private-sector economists published earlier this year by The Wall Street Journal, for instance, nearly 60% agreed a 2020 recession was likely as the Federal Reserve raises interest rates to cool off an overheating economy.

Still, Zillow economist Aaron Terrazas says that it won’t be housing leading the next downturn. "Housing affordability is a critical issue in nearly every market across the country, and while much remains unknown about the precise path of the U.S. economy in the years ahead, another housing market crisis is unlikely to be a central protagonist in the next nationwide downturn."

That doesn’t mean remodelers will be immune to the recession, but it is a good sign that it won’t be another 2008.


written by

James F. McClister

James McClister is managing editor for Professional Remodeler.


Add new comment

Plain text

  • No HTML tags allowed.
  • Web page addresses and email addresses turn into links automatically.
  • Lines and paragraphs break automatically.
  • CAPTCHA

    This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

Related Stories

Indicators of a Softening Market and How to Prepare

Market conditions could be changing, but don't panic. Richardson shares ways to stay on top of market conditions and how to prepare for any potential softening down the road.

Estimating Three Ways

Three remodelers reveal how they estimate a project

Grow Your Business Through Collaboration with Remodeling Peers

Remodeling Mastery Forums offers a unique business opportuniy for remodelers

Why We Hired an In-House Estimator

Bringing an estimator into your remodeling company creates sweeping benefits.

5 Tips on Setting up a Collection System

Construction lawyer Thomas Croessmann walks contractors through 5 tips on setting up a system for collecting payments from clients.

Remodeling Market Predictions: 2022

A Pro Remodeler Thought Leader reveals what he sees happening in 2022

What Profit Margin Should Specialty Contractors Aim For?

The problem with hoping to break even with a meager profit percentage is that it sets precedence. There’s no goal in mind, so there will be no goal to drive a team toward.

Should Remodelers Worry About a Homeowner's FICO Score?

Do FICO scores tell a homeowner's entire financial story? James Waite of Hearth weighs in on what home improvement pros should focus on when…

West Shore Home Implements $15 Minimum Wage

Home improvement juggernaut West Shore Home's new company-wide base wage doubles the legal minimum in nearly every state it operates

New Year, New PPP

Experts explain details of the second draw for the Paycheck Protection Program and answer lingering questions about taxability

Advertisement
boombox1 -
Advertisement
native1 -

More in Category




Advertisement
native2 -
Advertisement
halfpage1 -