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Homeowners have been spending more on home renovations in recent years, as high interest rates and stubbornly high inflation drove up costs for everything from flooring to refrigerators.

The home improvement spree got particularly heated early in the pandemic, when Americans invested to make their homes better suited for remote work and learning. But the home improvement frenzy appears to be cooling.

Harvard University’s Joint Center for Housing Studies’ latest leading indicator of remodeling activity, or LIRA, suggests homeowner spending on renovations and repairs will fall to $449 billion this year. That would represent a roughly 7 percent drop from 2023.

Spending on home remodeling was down 1.2 percent in the first quarter from a year earlier – the first annual decline in more than a decade. Historically, annual growth in home improvement spending has averaged 5 percent.

Many factors are contributing to the slowdown, including elevated interest rates, stubbornly high inflation and a national home sales slump. Home sales are one of the biggest drivers of spending, with homebuyers typically investing most heavily in upgrades or repairs in the first three years after buying their home.

“Sales are just really critical for a lot of remodeling activity,” said Abbe Will, a senior researcher at the JCHS.

The housing market remains constrained by the inventory of homes on the market, mortgage rates and rising prices. Those trends suggest slower home improvement spending growth, at least through the first quarter of 2025, according to the JCHS report.

“We are projecting declines going into the first part of next year, but certainly our trend suggests that we might see a bottom to the market this year,” Will said.

For homeowners considering renovation projects, this means it may be easier to schedule a contractor, but don’t bank on lower prices. Costs for construction, remodeling and labor will remain high, Will noted.