Homeowners are sprucing up their properties and undertaking more remodeling and repair projects, according to a recent study.
The Leading Indicator of Remodeling Activity, released by the Joint Center for Housing Studies at Harvard University, shows an annual growth in home improvement and repair expenditure this year that will remain above its long-term trend of 5 percent. Index authors, however, foresee a steady decline from 7.3 percent in the first quarter to 6.1 percent by the first quarter of 2018.
“Homeowners are continuing to spend more on improvements as house prices strengthen in most parts of the country,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “Yet, recent slowdowns in home sales activity and remodeling permitting suggests improvement spending gains will lose some steam over the course of the year.”
The National Association of Home Builders’ Remodeling Market Index also showed an increase in the first quarter of 2017, marking the highest reading in activity since 2015. The NAHB’s index shows that more remodelers are reporting that activity is higher now compared to the prior quarter. “A milder than usual winter has led to increased remodeling activity and a positive outlook for spring,” says Dan Bawden, the chairman of NAHB Remodelers. “Remodelers are seeing stronger market conditions with customers more willing to spend money on both small and large projects.”
Demand for major additions and alterations as well as for smaller remodeling projects and home maintenance and repair component all showed an uptick in the latest NAHB remodeling index reading.
Still, similar to the Joint Center for Housing Studies, NAHB remodelers are warning of a potential slowdown on the horizon as well.
“Remodelers will face challenges meeting the demand as the labor shortage continues and costs for materials, such as lumber, are rising,” says NAHB Chief Economist Robert Dietz.
—Melissa Dittmann Tracey, REALTOR® Magazine