Downturn in Home Remodeling May Bottom Out in 2024
Spending for residential improvements and repairs is expected to shrink this year for the first time since 2010, but signs point to some easing of declines by year’s end, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that declines in annual homeowner renovation and maintenance expenditure will worsen through the third quarter of this year before moderating slightly to -6.5 percent by the end of 2024.
“Home remodeling will continue to suffer this year from a perfect storm of high prices, elevated interest rates, and weak home sales,” says Carlos Martín, Project Director of the Remodeling Futures Program at the Center. “These headwinds create considerable uncertainty in the economy, and remodeling spending is projected to fall from $481 billion last year to $450 billion in 2024.”
“Even with the anticipated downturn, spending for improvements and repairs to owner-occupied homes this year is expected to easily surpass the robust levels seen early in the pandemic,” says Abbe Will, Associate Project Director of the Remodeling Futures Program. “Recent improvements in homebuilding and mortgage rates also support the prospect of turning a corner on the rate of remodeling spending losses by the end of the year.”
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The Leading Indicator of Remodeling Activity (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.
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 April 18, 2024.
The Remodeling Futures Program, initiated by the Joint Center for Housing Studies in 1995, is a comprehensive study of the factors influencing the growth and changing characteristics of housing renovation and repair activity in the United States. The Program seeks to produce a better understanding of the home improvement industry and its relationship to the broader residential construction industry.
The Harvard Joint Center for Housing Studies strives to improve equitable access to decent, affordable homes in thriving communities. We conduct rigorous research to advance policy and practice, and we bring together diverse stakeholders to spark new ideas for addressing housing challenges. Through teaching and fellowships, we mentor and inspire the next generation of housing leaders.
Contact: Kerry Donahue, 617-495-7640, [email protected].