Image courtesy of the Harvard University Joint Center for Housing Studies

High interest rates and low numbers of home sales are going to drag down homeowners’ spending on renovations and repairs, Harvard University researchers said Thursday.

The Joint Center for Housing Studies released its latest Leading Indicator of Remodeling Activity, or LIRA, report predicting remolding spending will fall 7.7 percent over the next year.

Spending on home improvements and repairs crested in the third quarter, researchers’ data shows, at $489 billion nationwide. That’s 5.4 percent above where it was at the same time last year, but $56 billion above what the nation’s homeowners spent in the third quarter of 2021 without adjusting for inflation.

The Harvard researchers think the fourth quarter will see a modest dip in spending, to $479 billion, before dropping sharply to $457 billion in the first quarter of 2024 before easing down to $452 billion nation-wide by the third quarter of next year.

Abbe Will, the associate project director for the team that compiles the LIRA, said next year “is shaping up to be a challenging year” for the remodeling industry.

“The ongoing weakness in the housing market caused by high interest rates and low supply of existing homes is expected to weigh on remodeling activity next year,” project director Carlos Martín said in a statement. “Homeowner concerns about the health and direction of the broader economy may also dampen plans for remodeling projects.”