Early indications suggest that, as it has for the previous two quarters, growth in remodeling activity remained more or less flat in the fourth quarter of 2019. Current projections show that trend will continue for much of the coming year.

Remodelers, however, are more optimistic, pointing to current project backlogs and a recent uptick in project inquiries.

The outlook for remodeling business in 2020 varies depending on what part of the market one is looking at. The Leading Indicator of Remodeling Activity (LIRA) from the Joint Center for Housing Studies (JCHS) at Harvard University is now forecasting only a slight annual gain of 1.5% in national spending for improvements and repairs on owner-occupied homes.

JCHS expects that spending will increase toward the end of the year if the recent upward trend in home sales continues. It is worth noting that the LIRA encompasses all home improvement and repair spending, not just professional services.

Shifting focus to just the kitchen and bath remodeling sector, analysts at John Burns Real Estate Consulting, which partners with the National Kitchen and Bath Association on producing the Kitchen and Bath Market Index (KBMI), have revised their forecast upward for 2020 due to improved home sales in the fourth quarter of 2019.

They anticipate a strong first half of the year in 2020 and then slowing beginning sometime around the second half. They, too, foresee slight year-over-year growth in both small and large discretionary remodeling projects, with a trend toward more smaller and lower-budget projects overall.

In its most recent forecast, based on results of the Residential Remodeling Index (RRI) data from the third quarter of 2019, MetroStudy projected an average year-over-year gain of 2.2% gain in remodeling activity in 2020. Their projection is more in line with that from John Burns than with the LIRA forecast. Either way, the outlook is for substantially slower growth compared to the average 5% annual growth the industry has experienced in the past several years.

Remodelers responding to the just-released Q1 2020 Houzz Renovation Barometer reported modest growth in the fourth quarter of 2019 compared to the previous quarter, with architects and design and build remodelers recording slightly higher gains than build-only remodelers and interior designers. All groups, however, to varying degrees, noted an increase in project inquiries and new committed projects. Project backlogs also increased from the previous quarter.

When asked about their expectations regarding business activity in the coming months, remodelers were confident but more conservative. The sentiment in the construction sector stayed more or less the same as in the previous quarter. In the architecture and design services sector, architects expressed more optimism, but interior designers’ expectations declined slightly.

These are national forecasts. Opportunities for growth will vary in different parts of the country and among professionals offering different services. Other factors such as how the housing market performs, costs of materials, and the on-going shortage of skilled labor, as well as weather patterns, will impact growth.

Barring a major unexpected development, though, the outlook for the industry calls for continued but slowing growth and year-over-year smaller gains.