Renovation Spending Continues to Grow, But More Slowly
Cambridge, MA – Strong gains in home remodeling and repair activity are expected to ease moving into next year, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that annual growth in home improvement and repair expenditure this year will remain above its long-term trend of 5 percent, but will decline steadily from 7.3 percent in the first quarter to 6.1 percent by the first quarter of 2018.
“Homeowners are continuing to spend more on improvements as house prices strengthen in most parts of the country,” says Chris Herbert, Managing Director of the Joint Center for Housing Studies. “Yet, recent slowdowns in home sales activity and remodeling permitting suggests improvement spending gains will lose some steam over the course of the year.”
“The remodeling market is approaching a cyclical slowdown after several years of steady recovery,” says Abbe Will, Research Analyst in the Remodeling Futures Program at the Joint Center. “While the rate of growth is starting to trend down, national remodeling expenditures by homeowners are projected to reach almost $320 billion by early next year.”
The Leading Indicator of Remodeling Activity (LIRA) provides a short-term outlook of national home improvement and repair spending to owner-occupied homes. The indicator, measured as an annual rate-of-change of its components, is designed to project the annual rate of change in spending for the current quarter and subsequent four quarters, and is intended to help identify future turning points in the business cycle of the home improvement and repair industry. Originally developed in 2007, the LIRA was re-benchmarked in April 2016 to a broader market measure based on the biennial American Housing Survey.
The LIRA is released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University in the third week after each quarter’s closing. The next LIRA release date is July 20, 2017.
The Remodeling Futures Program, initiated by the Joint Center for Housing Studies in 1995, is a comprehensive study of the factors influencing the growth and changing characteristics of housing renovation and repair activity in the United States. The Program seeks to produce a better understanding of the home improvement industry and its relationship to the broader residential construction industry.
The Harvard Joint Center for Housing Studies advances understanding of housing issues and informs policy. Through its research, education, and public outreach programs, the center helps leaders in government, business, and the civic sectors make decisions that effectively address the needs of cities and communities. Through graduate and executive courses, as well as fellowships and internship opportunities, the Joint Center also trains and inspires the next generation of housing leaders. For more information, please visit www.jchs.harvard.edu.
Contact: Kerry Donahue, (617) 495-7640, [email protected]