According to Leading indicator of renovation activity (LIRA) published by the Remodeling Futures Program of the Joint Center for Harvard University Housing Studiesspending on improvements and repairs to owner-occupied housing inventory is expected to increase through 2022 and into 2023 – but gradually, at a slowing pace.
The CRI projects that year-over-year increases in home renovation and maintenance spending will peak at 19.7% in the third quarter of this year before dropping to 15.1% in the first quarter of 2023.
“Massive increases in house price appreciation and resulting levels of workable real estate capital will continue to support renovation activity this year and next,” said Carlos Martín, project director of the Remodeling Futures program at the Center. . “Many other market indicators, including sales of existing homes, renovation permits and retail sales of building materials, also continue to grow at strong rates, albeit slowing.”
Column and line chart providing quarterly historical estimates and projections of homeowners’ improvement and repair expenditures from the fourth quarter of 2019 to the first quarter of 2023 as moving sums and four-quarter rates of change.
Year-over-year expense growth was flat at 1-3% from Q4 2019 to Q4 2020, followed by a gradual acceleration to 11.5% in Q1 2022; growth is expected to accelerate faster to a peak of 19.7% through the third quarter of 2022 before slowing to 15.1% in the first quarter of 2023. Annual spending levels are expected to decline from $391 billion through the first quarter of 2022 to $449 billion through the first quarter of 2023.
“The level of annual spending on home improvements and repairs is expected to reach almost $450 billion by the first quarter of 2023,” says Abbe Will, associate project director of the Remodeling Futures program. “Yet rising costs of project financing, building materials and labor, as well as growing concerns about a broader economic downturn or recession could further slow the growth of remodeling.”
The Leading Indicator of Renovation Activity (CRI) provides a short-term outlook for national spending on improving and repairing 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 the next four quarters, and aims to help identify future turning points in the economic cycle of the home renovation and repair industry. Originally developed in 2007, the LIRA was reassessed in April 2016 to a broader market measure based on the biennial US Housing Survey.
The LIRA is released by the Remodeling Futures Program at Harvard University’s Joint Center for Housing Studies during the third week after the close of each quarter. The next LIRA release date is July 21, 2022.
The Remodeling Futures Program, launched by the Joint Center for Housing Studies in 1995, is an in-depth study of the factors influencing the growth and changing characteristics of housing renovation and repair business in the United States. The program aims to produce a better understanding of the home improvement industry and its relationship to the broader residential construction industry.
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