Image courtesy of the Joint Center for Housing Studies

Higher home prices, recession fears and the near-death of the refinance market are likely to spell a significant slowdown in homeowners’ remodeling spending this year, researchers say.

But contractors and others engaged in the industry should still have hope: The market of homeowners needing remodeling services is bigger than previously thought according to the Harvard University Joint Center for Housing Studies.

The center released its latest Leading Indicator of Remodeling Activity report, or LIRA Thursday morning. The report predicts home renovation and maintenance spending will rise a mere 2.6 percent year-over-year in 2023, compared to the 16.3 percent year-over-year jump seen in 2022.

“Homeowners are likely to pull back on high-end discretionary projects and instead focus their spending on necessary replacements and smaller projects in the immediate future,” Carlos Martín, project director of the Remodeling Futures Program said in a statement.

New data incorporated into Thursday’s report, though, shows the overall market for remodeling and renovations is bigger than previously thought.

The massive pandemic-induced changes in housing and lifestyle decisions fueled remodeling and repair spending in 2020 and 2021, growing 23.8 percent over these two years compared with the 12.5 percent originally estimated,” associate project director Abbe Will said in a statement. “While the pace of expenditures is expected to slow substantially this year, we’ve raised our projection for the remodeling market size in 2023 by about $45 billion, or 10.2 percent, to $485 billion.”