Home improvement spending to decline faster in 2024, says Harvard report

CAMBRIDGE, Mass. – Annual expenditures for improvements and repairs to owner-occupied homes are expected to decline at an accelerating rate through the first half of 2024, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Joint Center for Housing Studies at Harvard University.

The LIRA projects that year-over-year spending on homeowner improvements and maintenance will shrink by 2.7% through the first quarter of next year and by 5.9% through the second quarter, following a slowdown in growth that began in the final quarter of 2022.

“Home remodeling activity continues to face strong headwinds from high interest rates, softening house price appreciation and sluggish home sales,” said Abbe Will, associate project director. “Annual spending on homeowner improvements and repairs is expected to decrease from $486 billion through the second quarter of this year to $457 billion over the coming four quarters.”

“The ongoing reductions in household moves will cause a decline in the remodeling and repair activity that typically occurs around the time of a home sale,” said Carlos Martín, project director. “The magnitude of the impact may be offset if owners who are locked into their current homes with ultra-low mortgage rates continue to renovate to meet changing needs or take advantage of new federal incentives for energy-efficiency retrofits.”

LIRA provides a short-term outlook of national home improvement and repair spending to owner-occupied homes. The indicator, measured as an annual rate-of-change of its components, is designed to project the annual rate of change in spending for the current quarter and subsequent four quarters, and is intended to help identify future turning points in the business cycle of the home improvement and repair industry.

Originally developed in 2007, the LIRA was re-benchmarked in April 2016 to a broader market measure based on the biennial American Housing Survey.

In similar news, existing home sales dropped in June, according to the National Assn. of Realtors. Sales varied throughout each of the four major U.S. regions, with the Northeast seeing gains, the Midwest staying the same, and the South and West reporting declines. All four regions recorded year-over-year sales dips.

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