Recent reports indicate a decline in the number of homeowners taking on remodeling projects. The Leading Indicator of Remodeling Activity (LIRA) peaked at 17.3% in the third quarter of 2022 but has been on a downward trend ever since. The NAHB/Westlake Royal Remodeling Market Index also reflects a similar decline, with the measure falling to 66 points in the first quarter of 2024. Despite these numbers, the sentiment among remodelers remains relatively positive, with more seeing the market conditions as “good” rather than “poor.”
The Covid-19 pandemic brought a surge in home renovation activity as homeowners sought to improve the spaces they were spending more time in. The availability of savings from stimulus checks and redirected funds from activities during lockdowns also fueled this trend. However, as Covid-era savings have diminished, the level of home improvement activity has decreased. Homeowners are now undertaking fewer and smaller remodels but are spending more per project due to inflation and increased costs for materials and construction labor.
According to the State of Home Spending by Angi, homeowners spent an average of $9,542 on home improvements in 2023, a 12% increase from the previous year. The number of projects per household has decreased to an average of 2.8 in 2023, down from 3.2 in 2022. This shift in spending patterns suggests that inflation has impacted household budgets, leading to a focus on fewer but higher-cost projects.
Despite the overall decline in home remodeling projects, remodelers continue to stay busy due to several contributing factors. Homeowners are now residing in their homes for longer periods, necessitating ongoing maintenance and upgrades. The aging housing stock in the U.S. is also a significant driver for remodeling work, as older homes require investment in repairs and renovations. The shift towards “aging-in-place remodeling” is particularly prominent among baby boomers who are choosing to stay in their homes during their retirement years.
Looking ahead, the home improvement activity is expected to further moderate from the peaks seen during the pandemic. The aging housing market and the increasing tenure of homeowners in their properties point towards a sustained demand for remodeling work. As homes continue to age, there will be a growing need for investments in renovations and upgrades to maintain the overall quality and value of properties across the country.
While the data reflects a decline in home remodeling projects, there are underlying factors driving the continued demand for renovation work. Homeowners and remodelers alike must adapt to changing trends and prioritize investments that enhance the livability and longevity of residential properties. By understanding the current landscape of the home remodeling market, stakeholders can better navigate the challenges and opportunities present in the industry.