By George DeMare, Vice President Business Development —
After several years of solid acceleration, annual growth in home improvement and repair spending is expected to slow, then grow in 2019.
According to a recent report by the Joint Center for Housing Studies at Harvard University, spending on home remodeling and repair will continue to increase next year, but at a more lethargic pace.
Also included in the study was an updated Leading Indicator of Remodeling Activity (LIRA) concluding that American homeowners spent $331.1 billion fixing up their homes in the third quarter of 2018. The report projects that spending will increase to $337.8 billion in the fourth quarter of this year.
Rising mortgage rates mixed with flat home sales across much of the U.S. seem to be stifling strong spending growth for homeowners looking to remodel. A low inventory of homes for sale is another burden. Selling a house comes with investments in remodeling and repairs before and after – a slow housing market tends to slow money spent on improvements.
Despite potential hurdles, many other remodeling market indicators including home prices, permit activity, and retail sales of building materials continue to strengthen and will support above-average gains in remodeling spending next year. Through the third quarter of 2019, annual expenditures for residential improvements and repairs by homeowners is still expected to grow over $350 billion nationally.
LIRA gives a short-term outlook for home improvement spending and is designed to forecast expenditures in the current quarter and three following quarters. Projections are based on a variety of factors – databases on home sales, home prices, remodeling permits, and retail sales of building products.