After years of feverish remodeling activity, Americans are starting to cool on home improvement projects.
The annual gain in homeowner spending on home improvements and repairs is expected to drop from 6.3% during the current quarter to less than 1% by the second quarter of next year, according to the Leading Indicator for Remodeling Activity from the Joint Center for Housing Studies of Harvard University.
Others, however, argue that the slowdown in remodeling is already upon us. Smaller remodeling companies have been particularly hard hit by this trend, said Robert Dietz, chief economist for the National Association of Home Builders.
“We’ve been noticing in the data this year that the remodeling market has been cooling,” Dietz said. “The market is cooling among some of the smaller remodelers. If you talk to the larger ones, they’re busy.”
The National Association of Home Builders latest quarterly Remodeling Market Index came in at 55, up one point from the previous quarter but down three points year over year. Figures above 50 in this index indicate that more remodelers are reporting market activity as having been higher rather than lower compared with the previous quarter.
Why Americans are cooling on home improvement projects
Chris Herbert, managing director of the Joint Center for Housing Studies, attributed the slowdown to a confluence of factors. “Declining home sales and homebuilding activity coupled with slower gains in permitting for improvement projects will put the brakes on remodeling growth over the coming year,” he said in the report.