More homeowners will put off remodeling, study says

WASHINGTON -- American homeowners will spend billions of dollars less on remodeling next year because of declining home values and their anxiety about further market weakness, according to a report from Harvard University’s Joint Center for Housing Studies.

This year, homeowners will spend $4.1 billion less, a 2.3% drop, on major home improvements, and those declines are due to continue through much of 2008, the study predicted.

Homeowners are expected to spend $173.6 billion on renovation this year, down from last year’s $177.7 billion. The tally does not include day-to-day maintenance and repair.

“As homeowners become increasingly concerned about falling house prices and a slowing economy, home improvement spending is dragging,” said Nicolas Retsinas, chief of the housing research center.

As home foreclosures rise, lenders have tightened underwriting standards for new purchases and refinancing. This, along with weak home appreciation, is likely to reduce the number of homeowners who would have used home equity to finance improvements.

“Given that equity withdrawals have been a key source of funding for home improvements, market spending is expected to suffer,” said Kermit Baker, director of the Remodeling Futures Program of the Harvard study group.