Report: Remodeling Spending to Accelerate Into 2016October 16th, 2015 by Editor
Spending on home improvement is projected to speed up next year after several quarters of slow growth, according to the Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at Harvard University’s Joint Center for Housing Studies. The LIRA projects annual spending growth for home improvements will accelerate from 2.4 percent last quarter to 6.8 percent in the second quarter of 2016.
“Home improvement spending continues to benefit from the last years’ upswing in housing market conditions, including new construction, price gains and sales,” says Chris Herbert, managing director of the Joint Center. “Strengthening housing market conditions are encouraging owners to invest in more discretionary home improvements, such as kitchen and bath remodeling and room additions, in addition to the necessary replacements of worn components, such as roofing and siding.”
“Although we expect remodeling activity to strengthen through the first half of 2016, further gains could be tempered,” says Abbe Will, a research analyst in the Remodeling Futures Program at the Joint Center. “Current slowdowns in shipments of building materials and remodeling contractor employment trends, as well as restrictive consumer lending environments, are lowering remodeler sentiment and could keep spending gains in the mid-single digit range moving forward.”
The Leading Indicator of Remodeling Activity (LIRA) estimates national homeowner spending on improvements for the current quarter and subsequent three quarters. The indicator, which measures the annual rate of change of its components, provides a short-term outlook of homeowner remodeling activity. It’s intended to help identify future turning points in the business cycle of the home improvement industry. The LIRA is released three weeks after each quarter’s closing. The next LIRA release date is January 21, 2016.