Report: Remodeling Spending Looks Strong Into 2018July 20th, 2017 by Editor
Home repair and improvement spending is expected to be strong through the rest of 2017 and into the first part of 2018, 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 remodeling market continues to benefit from a stronger housing market and, in particular, solid gains in house prices, which are encouraging owners to make larger investments in their homes,” said Chris Herbert, managing director of the Joint Center for Housing Studies. “Yet, weak gains in home sales activity due to tight inventories in many parts of the country is constraining opportunities for more robust remodeling growth given that significant investments often occur around the time of a sale.”
According to the LIRA, annual increases in remodeling expenditures will remain at or above 6.0 percent through the second quarter of 2018.
“Even with some easing this year, the remodeling market is still expected to grow above its long-term average,” says Abbe Will, research associate in the Remodeling Futures Program at the Joint Center. “Over the coming 12 months, national spending on improvements and repairs to the owner-occupied housing stock is projected to reach fully $324 billion.”
The 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.
The LIRA is calculated using eight economic indicators that have strong correlations to remodeling spending:
- U.S. Census Bureau’s Retail Sales at Building Materials and Supplies Dealers;
- National Association of Realtors’ Existing Single-Family Home Sales;
- U.S. Census Bureau’s Single-Family Housing Starts;
- CoreLogic’s Home Price Index (HPI);
- National Association of Realtors’ Existing Single-Family Median Sales Price;
- BuildFax’ Residential Remodeling Permits;
- The Conference Board’s Leading Economic Index (LEI), and;
- Bureau of Economic Analysis’ Gross Domestic Product.