The robust pace of spending on home renovations and repairs is expected to stay strong over the coming quarters, according to the most recently released Leading Indicator of Remodeling Activity. The LIRA, published by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, projects that annual growth in homeowner remodeling expenditure will remain above 7 percent throughout the year and into the first quarter of 2019.
“Strengthening employment conditions and rising home values are encouraging homeowners to make greater investments in their homes,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “Upward trends in retail sales of building materials and the growing number of remodeling permits indicate that homeowners are doing more—and larger—improvement projects.”
The LIRA provides a short-term outlook of national home improvement and repair spending to owner-occupied homes. Measured as an annual rate-of-change of its components, it 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.
“While the overall outlook is positive, one area of concern is the slowing growth in sales of existing homes, since sales traditionally trigger significant renovation spending by both sellers and buyers,” says Abbe Will, associate project director in the Remodeling Futures Program at the Joint Center. “Even with this headwind, annual spending on residential improvements and repairs by homeowners is set to exceed $340 billion by early next year.”