Renovation spending continues despite market leveling off post-pandemic

Americans continue to invest in home renovations, though the pace has slowed compared to the COVID-19 pandemic period. According to a report by the Remodeling Futures Program at Harvard University's Joint Center for Housing Studies, spending on home improvements and maintenance is projected to rise from $472 billion to $477 billion by the third quarter, marking a 1.2% increase.

The Leading Indicator of Remodeling Activity (LIRA) team uses data such as building materials sales and remodeling permits to make these projections. The current increase indicates a stabilization in the market following a surge during the pandemic when low interest rates spurred many homeowners to update their homes.

Abbe Will, associate director of the Remodeling Futures Program, described this period as "the big boom," noting that renovation activity grew by 10% to 15%. Will stated, “It was people catching up on work that they already wanted to do,” adding that it was also an opportune time for unplanned projects.

Despite recent slowdowns, spending remains significantly higher than pre-pandemic levels. Carlos Martín, director of the Remodeling Futures Program, noted that ongoing developments in new-home construction and existing home sales should positively impact residential improvement next year. He said stronger home values and equity levels would likely boost both discretionary projects and necessary replacements.

A survey by Clever Real Estate revealed that 63% of American homeowners prefer renovating their current homes over moving into pre-renovated properties. Homeowners cited various reasons for renovations: 35% for repairs or increased comfort, while 32% aimed at enhancing livability or aesthetic appeal. Additionally, 31% wanted personalization, and 30% sought increased home value.

However, challenges persist with renovations; 41% of homeowners experienced significant delays and 78% exceeded their budgets. Popular major renovations include bathroom remodels (37%), interior painting (33%), and HVAC upgrades (30%). Common minor updates involved installing new faucets (36%), light fixtures (35%), and kitchen updates (34%).