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Remodeling activity is expected to soften in the United States, according to a new report released by the Harvard Joint Center for Housing Studies.
The quarterly Leading Indicator of Remodeling Activity report released by the research center’s Remodeling Futures Program Wednesday projects that year-over-year spending for home renovation and repair will increase by just 1.2 percent year-over-year by the second quarter of next year.
According to Harvard JCHS data, Americans’ remodeling spending has crept back up this year from single-digit percentage dips in each quarter of 2024. Actual, non-inflation-adjusted spending increased 0.4 percent year-over-year in the first quarter of 2025 and 1.8 percent in the second quarter.
The center’s latest projections imply that homeowners’ total spending on remodeling projects will continue on that same path of modest percentage increases, all lower than either the current rate of inflation.
But the situation could have been a lot different, the researchers said.
“Weakness in the current housing market is expected to have a dampening effect on home improvement spending,” Rachel Bogardus Drew, director of the Remodeling Futures Program said in a statement. “Slowing construction starts and remodeling permitting activity, which are key factors in predicting future remodeling expenditures, are also putting downward pressure on home improvement growth.”
Single-family housing starts in May were at a rate of 924,000 according to the United States Census Bureau. This represents just a 0.4 percent increase above the revised April rate of 920,000.
“It will be important to keep an eye on whether the housing market shows any sign of rebound in the second half of the year, to assess if this slowdown is the beginning of a more significant downturn,” Chris Herbert, Harvard JCHS managing director, said in a statement. “However, federal cuts to incentives for home energy improvements could spur an increase in remodeling activity in the short term, as homeowners seek to take advantage of programs before they disappear.”
Image courtesy of the Joint Center for Housing Studies at Harvard University
