As spending on home improvements continues to decline year after year, one wonders if that could (and how) affect contractor schedules and material prices. Just as the decline in home sales is directly related to the increase in mortgage rates, the decline in spending on home improvements is directly related to the decline in home sales, as explained in the recent LIRA report. According to the report, the main reasons for the continued decline in spending on home renovation include “high interest rates, the decline in home price appreciation and the slow pace of home sales.” Despite the expected decline in spending in 2024, the home improvement industry should continue to invest in the residential sector. My hope is that spending on home renovation will stabilize and stop falling by the end of 2024, Biermeier adds.
Interest rates may be high and home renovation costs may have dropped, but that doesn't necessarily mean you should postpone home improvement projects. The NAR shared that 84% of homeowners wanted to spend more time in their renovated homes, while 69% said they enjoyed their homes more; 39% of homeowners were satisfied to see their home improvement project completed. Spending trends were much lower for homeowners or long-term residents who moved into their homes six or more years ago. While the expected 5.9% drop for the first half of 2024 is much less shocking, it does emphasize the fact that, for another year, spending on home improvements is expected to continue in a downward spiral. It's almost impossible to talk about the drastic changes in home improvement spending in recent years without reflecting on the COVID-19 pandemic and its influence on that specific market.
Deeper research into consumer spending and opinion provides an idea of where they plan to invest money in home improvements in the coming months. Adding a new coat of paint to a room is a great way to increase your ROI without spending a lot of money. Overall, homeowners have increased their spending on home improvements and have found more satisfaction in improving their living spaces. HIRI members have access to specific dollar figures reported by homeowners about what they plan to spend on each type of project in 2024.
