Remodeling business gains as home sales drop
Small companies whose success is tied to the remodeling business are looking healthy even as home sales drop.
Two reports last week showed that the housing market is weakening. The National Association of Realtors said sales of existing homes fell for the third straight month during June. And the Commerce Department said sales of new homes fell more than 5 percent last month. Rising interest rates and home prices are blamed for the slowdown. Another Commerce Department report showed that ground-breakings on new homes dropped more than 12 percent in June, a sign that weakness in the market may persist.
But a report released this month by Harvard University’s Joint Center for Housing Studies sees a strong home remodeling market though the middle of 2019, a trend that benefits contractors, painters and landscapers who tend to be small businesses. The center forecasts that homeowner spending on improvements and repairs will rise at an annual rate of 7.2 percent over the next four quarters, up from 6.6 percent during the previous four.
Chris Herbert, managing director of the center, said the strong job market and strengthening economy have encouraged owners to invest in their homes. The economy grew at an annual rate of 4.1 percent during the April-June quarter, according to the Commerce Department. While economists don’t expect that rate of growth to continue, they still predict that the economy will expand at a healthy pace.