The double-digit gains in home remodeling activity are expected to continue for the first half of 2014, before slowing to just under 10 percent in the third quarter, according to the latest leading indicator of home remodeling activity at the Joint Center for Housing Studies at Harvard University.
“The ongoing growth that we’ve seen in home prices, housing starts, and existing home sales is also being reflected in home improvement activity,” Eric S. Belsky, managing director of the Joint Center, said in a statement. “As owners gain more confidence in the housing market, they are likely to undertake home improvements that they have deferred.”
The report shows expected home improvement spending of $147.6 billion in the second quarter of this year, followed by $153.8 billion in the third quarter. The projected slower pace of growth in the second half of the year reflects an expected increase in borrowing costs as the market reaches pre-recession spending levels.
Home-improvement projects are making more sense than they have in recent years. While most renovations don’t pay off dollar-for-dollar when you sell a home, the return on investment for remodeling projects in 2014 increased to 66.1 percent, a jump of 5.5 points over last year and the largest increase since 2005, according to Remodeling Magazine.
A study last year by home improvement site Houzz.com found that homeowners would rather cut back in other areas, such as vacations and other big-ticket purchases, rather than delay or decrease their budgets for their home plans.
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