Home remodeling market projected to contract by 2024

After more than a decade of continuous growth, annual spending on improvements and repairs to owner-occupied homes is expected to decline by early next year, according to the Leading Indicator of Remodeling Activity (LIRA) from the the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.

The LIRA projects that year-over-year expenditures for homeowner improvements and maintenance will post a modest decline of 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,” Carlos Martín, the program’s project director, said in a statement. “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,” added Abbe Will, the program’s associate project director. “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.”