Slight Gains in 2020 Outlook for Residential Remodeling
CAMBRIDGE, MA - National spending for improvements and repairs on owner-occupied homes is expected to rise only modestly this year, 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 LIRA projects that home remodeling expenditures will increase by just 1.5 percent in 2020 compared with annual gains of 5–7 percent in recent years.
“While homebuilding and sales activity are now firming, softness from earlier last year will continue to pull on remodeling spending growth in 2020,” says Chris Herbert, Managing Director of the Joint Center for Housing Studies. “However, the slowdown should begin to moderate by year-end as today’s healthier housing market indicators will ultimately lead to more home renovation and repair.”
“A 2020 growth projection of less than 2 percent is certainly lackluster for the remodeling market, especially given historical average annual growth of about 5 percent,” says Abbe Will, Associate Project Director in the Remodeling Futures Program at the Center. “Even so, homeowner improvement and repair expenditures are still set to expand this year to over $330 billion.”
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The Leading Indicator of Remodeling Activity (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. Originally developed in 2007, the LIRA was re-benchmarked in April 2016 to a broader market measure based on the biennial American Housing Survey.
The LIRA is released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University in the third week after each quarter’s closing. The next LIRA release date has been changed to April 20, 2020 so that we can incorporate the latest estimates on the state of the US economy, in light of COVID-19.
The Remodeling Futures Program, initiated by the Joint Center for Housing Studies in 1995, is a comprehensive study of the factors influencing the growth and changing characteristics of housing renovation and repair activity in the United States. The Program seeks to produce a better understanding of the home improvement industry and its relationship to the broader residential construction industry.
The Harvard Joint Center for Housing Studies advances understanding of housing issues and informs policy. Through its research, education, and public outreach programs, the Center helps leaders in government, business, and the civic sectors make decisions that effectively address the needs of cities and communities. Through graduate and executive courses, as well as fellowships and internship opportunities, the Center also trains and inspires the next generation of housing leaders.
Contact: Kerry Donahue, (617) 495-7640, [email protected]