Despite a recent decline in the number of homeowners undertaking remodeling projects, the demand for remodeling remains solid, according to the National Association of Home Builders (NAHB). The Leading Indicator of Remodeling Activity (LIRA) and the NAHB/Wells Fargo Housing Market Index both indicate a moderate decrease in activity, but experts note that this should not be confused with a slow market. The LIRA, which measures home improvement and repair expenditures on owner-occupied homes, fell by 1.2% in the first quarter of 2024 compared to the previous quarter, following a peak of 17.3% in the third quarter of 2022. Similarly, the NAHB/Westlake Royal Remodeling Market Index, which gauges remodeler sentiment regarding the market, dropped from a peak of 87 points in the third quarter of 2021 to 66 points in the first quarter of 2024, with one less point than the prior quarter. However, despite the decrease, more remodelers still consider the conditions “good” rather than “poor”, according to Robert Dietz, NAHB’s chief economist.
A recent report by the State of Home Spending by Angi shows that although the number of remodeling projects has decreased, homeowners are spending more on each project. In 2023, homeowners spent an average of $9,542 on home improvements, representing a 12% rise from the previous year. This increase can be attributed to rising inflation and material and labour costs.
The trend towards aging-in-place is driving significant growth in the remodeling industry, particularly among baby boomers. According to research by the Joint Center for Housing Studies at Harvard University, as of 2024, the typical homeowner’s tenure in their residence was 11.9 years, approximately twice as long as it was in 2005. Nearly 40% of baby boomers have lived in their homes for almost two decades, while 16% have resided in their house for over a decade. As a result, many retirees are opting to remain in their neighbourhoods or live close to their loved ones, necessitating investments in their homes, including energy-efficient features and safety items such as lighting and handrails.
The present state of the housing market is another factor contributing to the need for remodeling. According to the U.S. Census Bureau’s 2021 American Housing Survey, the median age of all possessed houses was 41 years. Approximately 60% of existing housing stock stems from the 1980s or earlier. Consequently, there is a growing demand for maintenance, repairs, and modernization, particularly given the lack of new housing built in the past decade.
While remodeling activity is predicted to reduce further from pandemic highs, the NAHB maintains that remodelers are still experiencing high levels of work. The ongoing ageing of the population and the increasing age of the housing stock are both anticipated to continue fueling the demand for remodeling in the future.
Leave a Reply