Harvard Study Shows Robust Remodeling Growth Ahead
Cambridge, Mass.— Strongly accelerating growth in home improvement and repair spending is expected heading into 2017, according to the newly re-benchmarked Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The new and improved LIRA projects that home remodeling spending will increase 8.6% by the end of 2016 and then further accelerate to 9.7% by the first quarter of next year.
“Ongoing gains in home prices and sales are encouraging more homeowners to pursue larger-scale improvement projects this year compared to last with permitted projects climbing at a good pace,” says Chris Herbert, Managing Director of the Joint Center. “On the strength of these gains, the level of annual spending for remodeling and repairs is expected to reach nearly $325 billion nationally by early next year.”
“Our freshly recalibrated indicator now forecasts a broader segment of the national residential remodeling market that includes both improvement and repair activity to the owner-occupied housing stock,” says Abbe Will, a research analyst in the Remodeling Futures Program at the Joint Center. “With this re-benchmarking, the LIRA now more accurately sizes the remodeling market and continues to anticipate major turning points in the spending cycle.”
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. An explanation of this re-benchmarking and recalculation of the LIRA model is provided in “Re-Benchmarking the Leading Indicator of Remodeling Activity.”
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 21, 2016.
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.
Source: Harvard Joint Center for Housing Studies