Remodeling activity across the nation should maintain steady growth in 2021, according to the Joint Center for Housing Studies (JCHS) of Harvard University.
Moderate gains in homeowner spending for improvements and repairs are expected through much of next year as initial concerns of a possible pandemic-induced downturn have largely dissipated, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the JCHS.
The Remodeling Futures Program is no longer forecasting a downside range for its remodeling outlook due to greater clarity about the pandemic’s impact on the economy and given the resilience of housing markets.
The LIRA’s standard methodology projects annual growth in renovation and repair spending of 4.1% by the first quarter of 2021 with gains softening to 1.7% by the third quarter.
The LIRA also positions homeowner improvements and repair spending at $332 billion in the third quarter, up 2.2% from spending of $327 billion in the second quarter of this year.
Projections for the fourth quarter include a 3.4% increase to total spending of $338 billion. The JCHS expects spending to slip to $336 billion in the second quarter of 2021, but that's a 2.7% increase over the second quarter of 2020.
“The remodeling market is bouncing back from the initial shocks caused by the pandemic, as homeowners continue to spend significant time in their home and are adapting it for work, school, and leisure,” says Chris Herbert, managing director of the JCHS. “The surge in DIY and small project activity is lifting the remodeling market, but it remains to be seen if the strong sales market this summer translates into larger improvements that would drive even stronger growth in the coming quarters.”
The LIRA provides a short-term outlook of national home improvement and repair spending to owner-occupied homes.
“Annual expenditures for renovation and repair of the owner-occupied housing stock are expected to rise from about $332 billion today to $337 billion by the latter half of 2021,” says Abbe Will, associate project director in the Remodeling Futures Program at the JCHS. “While a softening of growth is projected in 2021, recent strengthening of home prices and sales activity—including second home purchases—could provide further boosts to remodeling and repair next year.”
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.
The next LIRA will be released on Jan. 21, 2021. Click here to read the current full report along with historical data.
In contrast to this report, the JCHS recently said that it expects a DIY activity to slow down as homeowners begin to avoid complicated projects and lose interest in home improvement activities.