Renovation spending is decelerating faster than expected this year, but could slow with more deliberation than previously anticipated next year, according to Harvard University’s Joint Center for Housing Studies.
The Leading Indicator of Remodeling Activity report shows that the four-quarter moving rate of change between July and September was 0.4 percentage points lower than what the center previously projected at 5.9%, and the 4.6% rate of change forecast for 4Q19 is 0.9 percentage points lower than earlier projections.
But the index’s most recent revision suggests that there could be a 3.4% gain in the first quarter of 2020 and a 0.9% increase in the second quarter of next year that are respectively 0.4 and 0.5 percentage points higher than earlier estimates.
“At $325 billion, homeowner improvement and repair spending in the coming year is expected to essentially remain flat compared to market spending of $326 billion over the past four quarters,” Abbe Will, associate project director in the remodeling futures program at the center, said in a press release.
Calculations used in Harvard’s index draw on select data from the following sources as inputs: the Census Bureau, the Conference Board, the Bureau of Economic Analysis, CoreLogic, BuildFax and the National Association of Realtors.
Harvard benchmarks the index to historical estimates of remodeling spending. Those estimates reflect data from the American Housing Survey. The Census Bureau conducts the survey on a biennial basis and the Department of Housing and Urban Development sponsors it.