A recent study shows that home renovations will decline as housing market troubles persist.

Home renovation spending in 2007 will be less than the figures posted in the past years, the report from the Joint Center for Housing Studies at Harvard University showed.

Declining home prices and waning consumer confidence are expected to negatively affect renovation activity, which is forecast to drop for the first time since 2003.

The Joint Center, which has tracked renovations since 1998 in its Leading Indicator for Remodeling Activity, expects a decline of 2.3 percent for all of 2007 as compared with the 2006 data.

Nicolas Retsinas, the center's director, said in a statement that "As homeowners become increasingly concerned about falling house prices and a slowing economy, home improvement spending is dragging. Coupled with very modest home sales, spending levels are likely to fall,"

Retsinas pointed out that the liquidity squeeze that gripped credit markets starting in July put a damper on cash-out refinancing activity, one of the prime methods home owners use to fund big renovation projects.

Home-price drops also affect consumer spending less directly, by eroding the "wealth effect," the feeling of high level of confidence of homeowners that home prices boosted during the boom.

The center predicted the decline will continue through at least the first half of 2008 with spending expected to drop 4.2 percent during the three months ending June 30, 2008.