Accelerating growth in residential improvement and repair expenditures is anticipated through the third quarter of 2018, according to the Leading Indicator of Remodeling Activity (LIRA) recently released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that annual gains in home renovation and repair spending will increase from 6.3% in the fourth quarter of 2017 to 7.7% by the third quarter of next year.
“Recent strengthening of the U.S. economy, tight for-sale housing inventories, and healthy home equity gains are all working to boost home improvement activity,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “Over the coming year, owners are projected to spend in excess of $330 billion on home upgrades and replacements, as well as routine maintenance.”
According to Abbe Will, research associate in the Remodeling Futures Program at the Joint Center, although they’re not factored into the LIRA model yet, recent hurricanes will also inevitably play a role in the market as major reconstruction and repairs get underway in affected areas.
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 is January 18, 2018.