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Getty Images 484678458 Lisa5201 Istock Getty Images Plus
Getty Images 484678458 Lisa5201 Istock Getty Images Plus
Getty Images 484678458 Lisa5201 Istock Getty Images Plus
Getty Images 484678458 Lisa5201 Istock Getty Images Plus

Slight Gains Expected for Residential Remodeling in 2020

Jan. 23, 2020
Home remodeling market softens, according to recent forecast numbers

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) recently released 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% in 2020 (see Chart) compared with annual gains of 5% to 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.”

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. It 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 April 16, 2020. “A 2020 growth projection of less than 2% is certainly lackluster for the remodeling market, especially given historical average annual growth of about 5%,” 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.”  

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.

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