New reports from the Harvard University Joint Center for Housing Studies have some good news, and some bad news. On the one hand, growth in home improvement spending is expected to slow down during 2015. On the other hand, home improvement spending is still growing. In fact, the U.S. home improvement industry could post record level spending in 2015.
The latest Leading Indicator of Remodeling Activity, which is designed to estimate national homeowner spending on improvements for the current quarter and subsequent three quarters, projects that the annual growth for 2015 will decelerate from 6.3% in the first quarter of 2015 to 1.6% by the third quarter.
“Due in part to weakening home sales last year, growth in remodeling spending is expected to deflate somewhat in 2015,” said Chris Herbert, Managing Director of the Joint Center, in a statement. “Homeownership rates continue to slide as lending remains tight and first-time homebuyers are not yet returning to the market.””
Growth is still growth, however.
“I think we will continue to see growth in Home Improvement sales,” says Guy Semmes, President, Hopkins & Porter Design Build. “In the upscale remodeling sector it will be a record year. Resales are up in that sector and people want good schools and community and are going to stay put. People are being more pragmatic about their improvements and are looking for value. They are a bit cautious, but looking for firms that they can trust.”
Another report released a couple weeks later, titled Emerging Trends in the Remodeling Market, reveals that although 2015’s growth will be slower than the past few years, it could still be enough to make 2015 the richest year for remodeling spending out of the past 15. It could even surpass the high point of $324 billion from 2007.
“The market is largely recovered,” Kermit Baker, director of the Harvard University Joint Center for Housing Studies’s remodeling futures program, told the Wall Street Journal. “It will resume growth at its historical level, which has been (an average of) just about 5% year over year for the past 30 years.”
So while 2015 may not be the fastest growing year, it could be the best year for the U.S. home improvement industry.