Harvard Housing Studies: Home Improvement Spending Will Remain LowOctober 16th, 2014 by Editor
In line with the slow recovery of the overall housing market, the home remodeling industry is expected to continue its path of moderating growth, according to the Leading Indicator of Remodeling Activity (LIRA). The report, done by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, projects annual growth in home improvement spending to ease to 3.1 percent through the second quarter of 2015.
“Stronger gains in remodeling activity are unlikely given the recent slowdowns we’ve seen in housing starts, sales, and house price gains,” says Chris Herbert, acting managing director of the Joint Center. “While the continued recovery in employment should ultimately keep the market on an upward trajectory, remodeling is likely to see slower growth rates moving into 2015.”
Abbe Will, a research analyst at the center, adds, “Growth in home remodeling activity continues to hover around its longer-term average of mid-single digit gains. Even though the housing market overall has been lackluster, many areas of the country remain economically healthy and remodeling contractor sentiment remains high.”
The LIRA estimates national homeowner spending on improvements for the current quarter and subsequent three quarters. The indicator, measured as an annual rate-of-change of its components, provides a short-term outlook of homeowner remodeling activity and is intended to help identify future turning points in the business cycle of the home improvement industry.