Homebuying and selling are primary drivers for remodeling projects, but with fewer sales, slowing price appreciation, and rates ticking up, remodeling growth is expected to drop off.
This is according to the latest forecast for the remodeling sector from Harvard's Joint Center for Housing Studies (JCHS), that predicts that home renovation growth will drop to the lowest level since 2016, since new owners spend roughly 30 percent more on projects than those who have lived in their residence longer. Americans are less confident about the housing market overall as costs continue to rise, including interest rates.
JCHS associate project director Abbe Will tells CNBC, "If they're going to do a cash out refi, or they're looking at a home equity loan or line of credit, I think the sentiment is that homeowners are taking a pause and wondering if that's really the right move right now, and then thinking, we don't have to do this major discretionary project now. We can put that off and see what's happening with the market."
Contractor Justin Sullivan is plenty busy this winter, completely gutting a historic Washington, D.C., home and adding on to it. But he is less sure about how his business will be six months from now. "Generally architects are six months ahead of us in terms of seeing slowdowns, and we're hearing a little bit that some of the architects, some of the design firms are slowing a little bit, which will probably hit us in six to 12 months."