Homeowners are spending less on renovations and remodeling

this Mortgage rates continue to soar New research shows that not only is this causing lending to slow, but interest in remodeling and renovations is drying up.

In a study of indicators of remodeling activity, the Joint Center for Housing Studies at Harvard University found that spending on home renovation and maintenance is expected to decline by 7.7% in the next 12 months, and spending on home renovation is expected to drop to $452 billion in the next four years. Sales for the period were $489 billion.

“While the market decline should slow significantly in the second half of the year, 2024 will be a challenging year for home renovations,” said Abbe Will, deputy project director of the United Center Renovation Futures Program.

This forecast is also a 180-degree change from the current decoration growth rate (annual growth of 5.4% at the end of September). But the downturn in the real estate market appears to be dampening enthusiasm for home buying. Improvement projects, researchers said.

Multiple surveys conducted during the first quarter of 2022 Growing interest in renovationBut most families say high home prices and limited inventory make renovations preferable to relocation.

although Housing costs and inventory constraints remain ample todayConsumers are also now facing higher interest rates on all types of loan products, including refinances, credit cards and home equity lines of credit.

Mortgage rates have more than doubled since January 2022, rising from nearly 3% to more than 7.5% in October of this year.Homeowners with plenty of cash on hand may Rely on these savings more often when choosing to renovateA recent LendingTree survey found that this is especially true for affordable projects.

But recent regulatory changes have the potential to revive some interest in remodeling and construction projects, such as adding or rehabilitating existing accessory dwelling units.The Department of Housing and Urban Development and the Federal Housing Administration said this week they are revising underwriting policies to include expected rental income when underwriting debt income FHA-Backed Renovation MortgagesWhen adding an ADU to their property, borrowers will be able to include 50% of expected rental income to qualify for this type of loan.

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