The Joint Center for Housing Studies of Harvard University recently published its latest quarterly Leading Indicator of Remodeling Activity (LIRA) report, predicting a 5.9% decrease in home renovation spending through the second quarter of 2024.

This report, which offers a "short-term outlook of national home improvement and repairs spending to owner-occupied homes," claims that home improvement spending is predicted to drop by $29 billion from Q2 of 2023 to the end of 2024.

A previous iteration of this report, from January 2023, predicted a much steeper decline in spending, going from 16.3% at the end of 2022 down to just 2.6% by the end of 2023.

While the predicted drop of 5.9% for the first half of 2024 is much less shocking, it does emphasize the fact that, for another year, home improvement spending is expected to remain on a downward spiral. 

This may indicate shifting priorities, but it's nearly impossible to talk about the drastic changes in home improvement spending over the last few years without reflecting on the Covid-19 pandemic and its influence on that specific market.

While there’s no denying that the pandemic had a devastating impact on the economy and life as a whole, it resulted in a drastic boom for all things home improvement.

While the U.S. economy shrank by 3.5% in 2020, spending on home improvements and repairs grew by more than 3%, to nearly $420 billion, as people modified living spaces for work, school, and leisure.

The abrupt lifestyle and work changes that the pandemic brought on, coupled with the home equity growth, made it possible for many homeowners to delve into projects they would have otherwise skipped in other circumstances due to lack of time or funds.

However, as infection rates decreased and many people were able to leave their homes and return regularly to public spaces, home improvement spending rates dropped.

Deane Biermeier, resident Forbes Home expert and general contractor, says that "homeowners spent a great deal in the past couple of years on home renovations. The wave didn't have much of a chance of lasting very long. It's not surprising ... that the combination of higher borrowing costs and economic uncertainty will continue to have a negative effect on the renovation market."

"I don't see home improvement spending increasing any time soon. My hope is that home renovation spending will level off and stop falling by the end of 2024," Biermeier adds.

However, Derek Walczak, Forbes Home Advisory Board member and owner and general contractor at Walczak Design + Build, says not to get your hopes up about lower pricing or more flexible workers' schedules just yet.

If you do find contractors that offer these seemingly too-good-to-be-true features, he advises to approach them with caution. "Pricing is a product of cost to operate, materials and, of course, cost to do the build. I don’t see any of those factors decreasing."

"As a design and build collaborative, we do not mark up our services based on a booked pipeline or availability," Walczak explains. "With that being said, there might be contractors out there that are in need of work and [are] willing to lower their [prices]."

Walczak notes you shoul bde wary in these instances, “I would caution homeowners to ask what is being excluded from the scope and what steps may be skipped to make up for the decrease in price."

So what does this mean for current homeowners? Is now a good time to renovate or purchase a home?

Although the housing market is uncertain, if you do decide to renovate, Walczak recommends keeping high-impact, high-ROI home improvement projects at the top of the priority list, while also considering how long you plan on staying in your current home to further inform you on what projects are worth it and achievable.

Walczak says that a good starting place could be remodeling kitchens and bathrooms because both typically add value and improve your daily experience within your home.

If you do decide to renovate, keep the long-term in mind, specifically if you are thinking about moving in the (near) future. “In the next five to 10 years, the neighborhood could completely change, so as long as you’re smart about any renovation and the construction is well thought out and designed, then you should make your money back and have better everyday quality of life for your family," Walczak says.