(Bloomberg) -- The boom in home remodeling fueled by the pandemic in the U.S. will likely peak this year, according to Harvard University research.

The spending surge is expected to slow in the second part of the year, the school’s Joint Center for Housing Studies’ latest Leading Indicator of Remodeling Activity showed, tampered down by rising costs of labor and materials, as well as rising interest rates that may deter some from undertaking expensive home projects.

Still, Americans will continue to splurge, with annualized spending on home improvements projected to increase to about $430 billion by the third quarter, nearly 20% higher than the same period last year.

Steady improvement in the labor market and improved household finances helped boost 2021 sales of previously owned homes to 6.12 million, the strongest year since 2006. Further growth in home improvement spending this year will support millions of jobs in the trades and service industries, and help ancillary services. 

A separate index bolsters the findings from Harvard. A gauge of remodeling from the National Association of Home Builders and Royal Building Products rose 4 points in the fourth quarter of 2021 from the same time a year earlier, signaling residential remodelers’ confidence.

“Higher home equity provided resources for home owners to improve their existing homes, supporting high demand for remodeling,” NAHB Remodelers Chair Steve Cunningham said in a statement. “Many remodelers are completely booked well into the future, however, supply chain problems continue to delay projects and make it difficult to work off the backlog.”

©2022 Bloomberg L.P.