JCHS: Remodeling, repair spending to see sizeable slowdown
Home improvement and remodeling spending will slow in 2023, according to the Joint Center for Housing Studies of Harvard University (JCHS).
The JCHS released its latest Leading Indicator of Remodeling Activity (LIRA) report this morning, which shows after several years of double-digit gains, expenditures for improvements and repairs to the owner-occupied housing stock are expected to grow only modestly this year.
The LIRA projects a steep deceleration in annual gains of home renovation and maintenance spending from 16.3% at the close of 2022 to just 2.6% by year-end 2023.
“Slowdowns in existing home sales, house price appreciation, and mortgage refinancing activity coupled with growing concerns for a broader economic recession will cool home remodeling activity this year,” said Carlos Martín, project director of the Remodeling Futures Program at the Center. “Homeowners are likely to pull back on high-end discretionary projects and instead focus their spending on necessary replacements and smaller projects in the immediate future.”
Abbe Will, associate project director for the remodeling futures program, said the massive pandemic-induced changes in housing and lifestyle decisions fueled remodeling and repair spending in 2020 and 2021.
During that span, spending increased by 23.8% compared to a prior estimate of 12.5%.
“While the pace of expenditures is expected to slow substantially this year, we’ve raised our projection for the remodeling market size in 2023 by about $45 billion, or 10.2% to $485 billion," Will said.
Previously, the LIRA projected a homeowner improvement and repair market size of $429 billion in 2022 with spending growing to $440 billion in 2023. Now with the replacement of AHS-based benchmark data for previously modeled estimates, the LIRA model indicates remodeling activity reached $472 billion in 2022 and projects spending will reach $485 billion this year.
Will said the implication of significantly stronger growth in actual remodeling and repair spending from 2019 to 2021 is an expansion in market size estimates for 2022 of 10.2% or $43.8 billion, and a similar expansion in market size projections for 2023 of 10.2% or $44.9 billion.
Click here to read the full LIRA report from the JCHS.