The Leading Indicator of Remodeling Activity (click here for the most recent 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. Produced quarterly since 2007, the LIRA is released by the Remodeling Futures Program at the Joint Center in the third week after each quarter's closing.
The development of the LIRA is detailed in:
N07-1: Developing a Leading Indicator for the Remodeling Industry.
In April 2016, the LIRA underwent a major re-benchmarking and recalculation in order to better forecast a broader segment of the national residential remodeling market:
N16-4: Re-Benchmarking the Leading Indicator of Remodeling Activity.
This re-benchmarking followed a 2008 update necessitated by a discontinuation of the LIRA's original underlying reference series explained in research note n08-1.
View the latest Press Release for the Historical LIRA Data and Calculation Methodology.
Frequently Asked Questions about the LIRA
What does the LIRA measure?
The LIRA is benchmarked to Joint Center estimates of national home improvement and repair spending to owner-occupied units based on data from the Department of Housing and Urban Development’s biennial American Housing Survey. The LIRA projects the annual rate of change in the value of residential improvements and repairs in the U.S. Home improvement activities include remodeling, renovation, additions, major alterations or replacements of home components to existing owner-occupied properties that add value to the home, whereas maintenance and repairs simply preserve the current value of the home.
Unfortunately, the American Housing Survey does not collect any data on remodeling or repair activity to rental units.
How is the LIRA computed?
The LIRA is computed as a weighted average of the annual rates of change in several key economic indicators that typically influence remodeling activity. The LIRA was designed to project short-term trends in national home improvement and repair spending by estimating an annual rate of change in spending for the current quarter and subsequent four quarters. This annual or moving four-quarter rate of change compares total spending in any given four-quarter period to the total spending that occurred in the four quarters prior to that period.
View an example of how a moving four-quarter rate of change is calculated.
How do you read the LIRA chart?
The LIRA projections, which are annual rates of change in improvement and repair spending, can be found in the line graph for the last four quarters of the chart. Since the LIRA is designed as a forward-looking indicator, all of the historical data in the chart are Joint Center estimates based on American Housing Survey data or are produced by the LIRA model until AHS data become available.
The bars in the LIRA chart each represent four-quarter spending totals, where each bar is the sum of spending in that quarter plus what was spent in the three quarters prior (i.e. the value of the bar for 2016-1 is the accumulated spending that occurred during 2015-Q2, 2015-Q3, 2015-Q4 and 2016-Q1). In this way, the bars for the fourth quarters in the chart represent what was spent during that calendar year. The line chart provides moving four-quarter rates of change in spending levels on a quarterly basis. For example, in 2015-4 the rate of change of 4.4% percent is the growth in total spending in all of 2015 ($285.4 billion) compared to estimated spending in all of 2014 ($273.3 billion).
Which economic indicators are used as inputs in computing the LIRA?
The LIRA makes use of several economic indicators that historically have had strong correlations and leads over remodeling spending to anticipate near-term changes in the market. Currently the LIRA model utilizes the following eight indicators:
- 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®)
- Bureau of Economic Analysis’ Gross Domestic Product
More detailed information on the inputs can be found in Tables 3 and 6 in “Re-Benchmarking the Leading Indicator of Remodeling Activity” (JCHS Research Note N16-4).
Is the LIRA available separately for improvements and maintenance/repairs?
Although the published LIRA is produced with separate improvements and maintenance spending models, at this time only the combined output of the separate models is available.
Is the LIRA available at a regional, state, or metro level?
No. Unfortunately, collecting high quality, detailed remodeling data continues to be a struggle for the industry. Quality and timely data at the national level is limited, and data on remodeling spending at the state and local level is not routinely collected.
A regional breakdown of historical national improvement spending is available for every other year for the past two decades in the web tables of the Joint Center’s biennial Improving America’s Housing report.
Is the LIRA available for specific categories of remodeling project?
No. Data on remodeling spending by project type is available for every other year for the past two decades in the web tables of the Joint Center’s biennial Improving America’s Housing report.
Is the LIRA available by professionally-installed vs. DIY projects?
No. Data on remodeling spending by installation type is available for every other year for the past two decades in the web tables of the Joint Center’s biennial Improving America’s Housing report.
Why do the remodeling spending estimates released quarterly with the LIRA differ from the Joint Center for Housing Studies’ biennial market size estimates?
The major difference is that the LIRA includes home improvement and repair activity to owner-occupied properties only, whereas the Joint Center’s total market size also includes improvement and repair spending to rental properties. The LIRA spending levels are also further refined from the biennial owner-occupied market size estimates, which crudely assume that two-year spending levels were equally distributed. The refined procedure for distributing two-year spending for the purpose of the LIRA is detailed in Re-Benchmarking the Leading Indicator of Remodeling Activity.