Spending for improvements and repairs on owner-occupied homes is expected to expand by the middle of next year, reversing the recent pullback, according to the Harvard University Joint Center for Housing Studies’ latest Leading Indicator of Remodeling Activity (LIRA). Annual expenditures for home renovation and maintenance are projected to grow by 1.2% through third quarter of 2025.
New home construction rates and sales of existing homes are both growing, signaling good news for residential improvement and repairs next year. Plus, 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.
Projections put annual spending for home improvements and maintenance on a growth track, adding $5 billion dollars in the next year, from $472 billion today to $477 billion through Q3 2025. This should put residential remodeling and repair expenditures back on track to approach past peak levels from here on out.
According to a recent poll conducted by TD Bank, two-thirds (66%) of homeowners still consider their homes to be a source of wealth for future generations, indicating that homeowners continue to perceive their houses as strong financial assets in the present market climate. According to three out of five respondents (60%) who bought their most recent house, they decided not to sell anytime soon because of the low interest rates they were able to get on their mortgage. Rather, the increasing equity in their property is helping them accumulate wealth.
And with the presidential elections in the books, the National Association of Home Builders (NAHB) has found that builder sentiment has improved for the third straight month, and builders expect market conditions will continue to improve with Republicans winning control of the White House and Congress. Builder confidence in the market for newly built single-family homes was 46 in November, up three points from October, according to the NAHB/Wells Fargo Housing Market Index (HMI).
“With the elections now in the rearview mirror, builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry that will lead to the construction of more homes and apartments,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kansas. “This is reflected in a huge jump in builder sales expectations over the next six months.”
Click here for more on the Harvard Joint Center for Housing Studies Leading Indicator of Remodeling Activity (LIRA) report.
