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After recent pullbacks on home remodeling, the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University is predicting that remodeling spending will increase in 2025.
The Leading Indicator of Remodeling Activity (LIRA), projects that annual expenditures for home renovation and maintenance will grow by 1.2 percent through the third quarter of 2025.
“Annual spending for home improvements and maintenance is projected to grow from $472 billion today to $477 billion through the third quarter of 2025,” Associate Director of the Remodeling Futures Program Abbe Will said in a statement. “A quick return to growth after a fairly modest downturn ultimately means that residential remodeling and repair expenditures are expected to approach past peak levels moving forward.”
Part of the reason for the increase in remodeling activity is the lack of new construction and a continued lack of home sales. According to the latest data from The Warren Group, the number of home sales in September of 2024 was a 3.7 percent decrease from September of 2023.
“A continued thaw in new home construction and sales of existing homes bodes well for an uptick in residential improvement and repairs next year,” program director Carlos Martín said in a statement. “Additionally, stronger gains in home values and thus home equity levels should boost both discretionary and ‘need-to-do’ replacement projects for owners staying in place.”
Originally developed in 2007, the LIRA provides a short-term outlook of national home improvement and repair spending to owner-occupied homes. 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.
Image courtesy of the Joint Center for Housing Studies