Annual growth in remodeling spending is expected to soften in 2019, according to the latest 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 residential remodeling expenditures year-over-year increases will reach a decade high of 7.7% this year before falling back to 6.6% through 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,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “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.”
Despite this predicted slower growth, Abbe Will, associate project director in the Remodeling Futures Program at the Joint Center, says other remodeling market indicators such as home prices and retail sales of building materials continue to strengthen. The projected annual expenditures for residential improvements is still expected to grow to over $350 billion nationally through the third quarter of next year.
The previous LIRA, released in July 2018, predicted spending would reach $349.8 billion in 2019's third quarter with a 7.4% rate of change.
LIRA provides a short-term outlook of national home remodeling spending and is designed to project the annual rate of change in spending for the current quarter and following four quarters.
The next quarterly report will be release in mid-January.
