ORLANDO, Fla. - In the mid-1990s, predictions were that remodeling activity would outpace home construction within 10 years, as building costs rose and available land dwindled.

That prediction has yet to be borne out, though Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies at Harvard University, believes it will in the next decade.

At this moment, however, the remodeling industry faces the same kind of soft market being experienced by the rest of the housing industry, Baker told a news conference at the recent International Builders Show here. His comments came the day the center released results of a study of future growth in the remodeling industry.

"After strong growth earlier in this decade, where low financing costs and strong returns to house values encouraged upper-end remodeling projects . . . many homeowners are putting projects on hold until the market stabilizes," Baker said.

Still, spending on remodeling totaled $280 billion in 2005, according to the study, which is based on data obtained from the industry and government, among other sources. And Baker expects a healthy recovery for remodeling, increasing at a 3.7 percent inflation-adjusted compound annual rate over the next decade.

The 2005 figure reflects almost a doubling of remodeling spending since 1995, he said.

William Apgar, a senior scholar at the center, expects homeowner spending on remodeling projects to increase 44 percent by 2015. The amount spent by homeowners on work performed by professional remodelers is forecast to grow 44 percent, or 3.8 percent a year adjusted for inflation, while do-it-yourselfers will shell out 3.2 percent more each year, increasing almost 38 percent by 2015.

The current slowdown in home sales means that owners are staying put longer, Baker said, and that will change the makeup of home-improvement spending. Recent home buyers often focus on updating kitchens and baths, as well as adding rooms or making structural changes, the center's findings show. Longer-term homeowners, who have already established how they use their space, make different spending decisions, choosing to maintain the condition of their homes.

Overall, the age of the nation's housing stock is increasing, the center's study shows, and therefore is in increasing need of remodeling and repair. Two-thirds of all houses in the United States are at least 25 years old, a point at which homeowner spending on improvements generally increases; exterior features such as roofing, siding and windows may need replacing; and heating/air conditioning and electrical systems may need upgrading.

Rising costs are forcing homeowners to put energy efficiency at the top of their remodeling concerns - something that Baker, as chief economist of the American Institute of Architects, said he has been finding more in recent surveys.

"Energy prices are not going to drop," he said, and recent increases in natural-gas prices as cold weather settled into North America are indicative of what is to come.

In recent years, the push for homeownership led to a decline in the level of remodeling investment in rental properties. But as the for-sale market continues to be soft, the center's research shows, growing demand for upper-end apartments already has encouraged more spending on such units.

As short-term interest rates have increased, house-price appreciation has slowed, and home sales have faltered, the home-improvement market has shifted to a more sustainable growth rate, the research shows. Instead of taking on expensive projects, homeowners are investing in more routine replacement projects, systems upgrades, and mid-range rather than upscale improvements - a new roof or half-bath renovation, for example, instead of a $150,000 two-story addition.

Among the other findings of the center's remodeling study:

The top 5 percent of households spending the most for home improvements accounted for 60.7 percent of all remodeling expenditures in 2004-05.

Owners of about 31 million houses averaged less than $1,000 a year on real improvements and maintenance spending from 2000 to 2005, which in many cases was not enough to maintain the current condition of the house.

In most cases, mid-price versions of projects now pay off better for homeowners than upscale versions do, and replacement projects currently provide a better return on average than discretionary improvements.

On average in 2005, households whose homes had appreciated at least 100 percent over the previous decade spent in excess of 2.5 times more on improvements than those whose home values increased less than 50 percent.

With aggregate U.S. home equity at $10.2 trillion in 2005 and almost a trillion dollars outstanding in home-equity borrowing, homeowners will have the means as well as the motivation to invest in their houses in the coming years, the center's study shows.

And it provides a new figure for the number of general and special-trade remodeling contractors nationwide. The long-standing estimate, based on census data, was about 880,000. The new figure is 530,000, and even that represents a 32 percent increase between 1997 and 2002, the study says.

"Residential remodelers are becoming more specialized by focusing more of their activity on the home-improvement market, with 94 percent of general-contracting revenues and 78 percent of special-trade revenues coming from remodeling projects in 2002," Baker said.

Between 1999 and 2005, both design/build and specialty-remodeling contractors had stronger revenue and more stable receipts than firms that offered a broad range of home-improvement services.

"On the House" appears Sundays in The Inquirer. Contact Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.