Annual growth in big-ticket home improvement spending will decelerate to 1.6% by the third quarter of 2015 from 6.3% in the first quarter, says the latest Leading Indicator of Remodeling Activity (LIRA) report from Joint Center for Housing Studies (JCHS) of Harvard University.

The report predicts spending in 3Q15 will total $140.1 billion, slightly above its 2Q15 prediction of $137 billion, but slightly below its first quarter forecast of $142.4 billion.

"Due in part to weakening home sales last year, growth in remodeling spending is expected to deflate somewhat in 2015," says Chris Herbert, Managing Director of the Joint Center. "Homeownership rates continue to slide as lending remains tight and first-time homebuyers are not yet returning to the market." 

Although contractor sentiment has cooled in recent quarters, it remains favorable overall," added Abbe Will, a research analyst in the Remodeling Futures Program at the Joint Center. "House price gains are moderating but still strong and home sales appear to be turning a corner now, all of which bodes well for continued, if more moderate, home improvement gains for 2015," said Will.

The LIRA report focuses on home improvements that cost at least $500. The $140.1 billion in expected spending excludes spending on minor maintenance projects as well as all spending by landlords on their rental properties.