Home improvement activity will slow considerably by the end of 2019
Homeowners will start cutting back on home repair and improvements this year, according to a recent Harvard study.
Data from Harvard University’s Joint Center for Housing Studies (JCHS) showed that annual growth in the national market for home improvement and repair is expected to slow considerably by the end of the year. Harvard JCHS projects that gains in renovation and repair spending will shrink from 7.5% in 2018 to 5.1% in 2019.
Harvard JCHS tracks the trends in the remodeling market through its Leading Indicator of Remodeling Activity (LIRA) index. According to Harvard JCHS, the indicator 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.
“Slowing house price appreciation, flat home sales activity, and rising mortgage interest rates are deflating owners’ interest in making major investments in home improvements this year,” said Chris Herbert, managing director at Harvard JCHS. “Continued slowdowns in homebuilding, sales of building materials, and remodeling permits all point to a more challenging environment for home remodeling in 2019.”
“Despite the growing headwinds, improvement and repair spending is still set to expand this year to over $350 billion,” says Abbe Will, associate project director in the remodeling futures program at Harvard JCHS. “But after several years of stronger-than-average increases, the pace of growth in remodeling activity is expected to fall back to the market’s historical average annual gain of 5.2%.”