Homeowner remodeling spending has declined since 2022, however, a new report from the Joint Center for Housing Studies at Harvard University expects it to pick up in 2025. Harvard Joint Center for Housing Studies associate director of the remodeling futures program Abbe Will joins Wealth! to discuss the projection and how homeowners are managing the housing market.

"We've been facing some pretty challenging headwinds for remodeling over the last couple years," Will explains. She points to the high cost of labor and materials as headwinds for home remodeling. alongside the weakness in existing home sales caused by high prices and mortgage rates. She adds that many current homeowners are holding "really significant levels of equity in their homes today," so they're unlikely to move as interest rates and home prices remain high.

Will explains, "we're still projecting that over this coming year into the middle of 2025 that the market will still be a little bit lower than what we saw in terms of spending over this last year." She does not expect a full recovery of the market within the next year, but could see signs of a recovery starting as early as the second half of 2025. In the meantime, she expects home improvement projects based on updating old systems and equipment to continue to be a large part of spending on home remodeling. However, with spending projected to increase in 2025 as interest rates come down, more homeowners may be taking on larger projects like kitchen remodels or room additions.

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This post was written by Melanie Riehl