Fewer homeowners have been taking on remodeling projects, reports show. But don\u2019t mistake it for a slow market.<\/p>\n
The Leading Indicator of Remodeling Activity, an outlook\u00a0measuring home improvement\u00a0and repair spending on owner-occupied homes, peaked at 17.3% in the third quarter of 2022. The LIRA has been declining since, and slid 1.2% in the first quarter of 2024 compared to the prior quarter.<\/p>\n
The NAHB\/Westlake Royal Remodeling Market Index by the National Association of Home Builders reflects a similar decline. The RMI, which measures remodelers\u2019 sentiment about the market, peaked at 87 points in the third quarter of 2021, and like the LIRA, has been consistently declining since. In the first quarter of 2024, the\u00a0measure fell\u00a0to 66 points, down one point from the previous quarter.<\/p>\n
However, the RMI is still in territory where more remodelers see the conditions as \u201cgood\u201d rather than \u201cpoor,\u201d said Robert Dietz, chief economist of NAHB.<\/p>\n
In a release for the group\u2019s first quarter\u00a0report, NAHB Remodelers Chair Mike Pressgrove noted that \u201cdemand for remodeling remains solid, especially among customers who don\u2019t need to finance their projects at current interest rates.\u201d<\/p>\n
The height of the Covid-19 pandemic brought with it a\u00a0burst of home renovation activity.<\/p>\n
Homeowners were eager to invest in the spaces they were spending so much time in: updating key spaces like kitchens and bathrooms, building out home offices and adding pools.<\/p>\n
Some also had savings built up thanks to stimulus checks, and from activities they couldn\u2019t do during early lockdowns \u2014 and rerouted that money toward home improvements and remodels, said Abbe H. Will, senior research associate and associate director of Remodeling Futures at the Joint Center for Housing Studies at Harvard University. In 2021, owners used cash from savings to pay for nearly four out of five projects,\u00a0according\u00a0to a JCHS report.<\/p>\n
\u201cWe\u2019re coming off such high levels of spending,\u201d Will said.<\/p>\n
As Covid-era\u00a0savings have dried up, so has that boost in activity.<\/p>\n
Homeowners are doing fewer and smaller remodels. Yet they are spending more per project, in part due to broader inflation and higher\u00a0costs\u00a0for materials and construction labor.<\/p>\n
Homeowners spent\u00a0an average $9,542 on home improvements in 2023, a 12% increase from a year prior, according\u00a0to the State of Home Spending by Angi. At the same time, the amount of projects decreased to an average of 2.8 projects in 2023 from 3.2 in 2022. The survey polled 6,400 consumers between Oct. 22 and Oct. 23.<\/p>\n
The increase in home improvement spending, along the decrease in projects, suggests inflation corroded household budgets, according to the home services website.<\/p>\n
While home improvement activity is expected to further moderate from pandemic highs, remodelers continue to be busy with work.<\/p>\n
Contributing to demand:\u00a0Owners are living in their homes for longer\u00a0and the existing housing stock in the U.S. is getting older. Both factors are going to require homeowners to invest in the upkeep of their properties, experts say.<\/p>\n
As of 2024, the typical homeowner\u2019s tenure in their home is 11.9 years,\u00a0according\u00a0to Redfin, a real estate brokerage site. That\u2019s nearly double the average 6.5 years in 2005.<\/p>\n
It\u2019s largely driven by\u00a0baby boomers\u00a0aging in place; nearly 40% of boomers have lived in their homes for almost 20 years, while 16% have stayed in their home for at least a decade, Redfin found.<\/p>\n
\u201cAging-in-place remodeling\u201d has turned into a big subsector in the remodeling market as baby boomers move into their retirement years, said Dietz. Instead of relocating, some retirees\u00a0plan to stay\u00a0in their neighborhoods or close to family.<\/p>\n
\u201cBut that means they\u2019re investing in their homes, whether it\u2019s energy efficiency items [or] safety items like lighting and railings,\u201d Dietz said.<\/p>\n
However, the real driver for remodels is the aging housing market. In 2021, the median age of all owned homes was 41 years old,\u00a0according\u00a0to the 2021 American Housing Survey by the U.S. Census Bureau. Homes built in the 1980s or earlier make up about 60% of existing stock,\u00a0according\u00a0to a U.S. Census data analysis by the NAHB.<\/p>\n
\u201cIt really speaks to the fact that we haven\u2019t built a lot of new housing over the last decade. That aging housing stock is going to require investment,\u201d Dietz said.<\/p>\n<\/p>\n
Fewer homeowners have been taking on remodeling projects, reports show. But don\u2019t mistake it for a slow market. The Leading Indicator of Remodeling Activity, an outlook\u00a0measuring home improvement\u00a0and repair spending on owner-occupied homes, peaked at 17.3% in the third quarter of 2022. The LIRA has been declining since, and slid 1.2% in the first quarter […]<\/p>\n","protected":false},"author":0,"featured_media":4342,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-4341","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4341","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=4341"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4341\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/4342"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=4341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=4341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=4341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}