Housing Markets Home-Improvement Spending Expected To Decline
Renovation and maintenance spending is predicted to decline over the next year for the first time in ten years, according to The Wall Street Journal.
Home sellers usually purchase materials to improve the quality of their homes before listing them on the market, and buyers usually renovate their recently purchased homes, but this process might not be the norm in the future. Harvard University's Joint Center for Housing Studies predicts slower growth and possibly a decline for the first time since 2010.
“Seeing this slowdown and decline into next year is certainly worrisome for the economy,” said Abbe Will, associate project director for the Harvard’s Remodeling Futures Program. Remodeling activity is usually a good indicator of the housing market and consumer confidence.
The National Association of Realtors reported that sales of previously owned homes fell 2.2 percent in September, which could be attributed to rising home prices as well. The Harvard Index predicts annualized spending to decrease by 0.3 percent by spring, compared to the historical average of 5 percent annual growth.
“We have some reason to believe this may be a turning point in the cycle for home remodeling, but it could be a hiccup,” Will said. Furthermore, she implied that lower interest rates “could help keep the market chugging along for a little more and maybe these declines won’t turn into a negative.”
Home renovation and maintenance are expected to decline in 2020, another indicator of decreasing consumer confidence and a possible slowdown in the housing market.