The Joint Center for Housing Studies of Harvard University expects remodeling activity to soften next year, according to the Leading Indicator of Remodeling Activity (LIRA) released in mid-October.
LIRA projects that year-over-year increases in residential remodeling expenditures will reach a decade high of 7.7% in 2018, then slip to 6.6% by the third quarter of 2019.
“Rising mortgage interest rates and flat home sales activity around much of the country are expected to pinch otherwise very strong growth in homeowner remodeling spending moving forward,” Chris Herbert, managing director of the Joint Center for Housing Studies, said in a statement. “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.”
However, Abbe Will, associate project director of the Remodeling Futures Program at the Joint Center, noted that other remodeling indicators, like home prices, permit activity and retail sales of building materials, will continue to grow.
[Related: Bathrooms topped 2017 remodeling projects: NAHB]
“Through the third quarter of 2019, annual expenditures for residential improvements and repairs by homeowners [are] still expected to grow to over $350 billion nationally,” Will said in the statement.
Homeowners spent over $331 billion on improvements and repairs in the third quarter of 2018, a 7.5% increase over Q3 2017, according to the Joint Center for Housing Studies. Although expenditures are expected to increase to $353 billion by Q3 2019, that’s only a 6.6% increase.