The latest LIRA projects smaller year-over-year spending gains in the second quarter of 2023.
According to the latest Leading Indicator of Remodeling Activity (LIRA), annual growth in homeowner spending for improvements and repairs will slow down in the first half of 2023.
Released today by the Remodeling Futures Program at the Joint Center for Housing Studies (JCHS) of Harvard University, the LIRA projects year-over-year gains in remodeling expenditures could decrease from 17.4% in 2022 to 10.1% by the second quarter of next year.
“Slowing sales of existing homes, rising mortgage interest rates, and moderating house price appreciation are expected to dampen owners’ investments in home improvements and maintenance over the coming year,” Carlos Martín, project director of the Remodeling Futures Program at the Center, said in a statement issued by JCHS this morning. “Steep slowdowns in homebuilding, retail sales of building materials, and renovation permits all also point to a cooling environment for residential remodeling.”
The 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.
“While beginning to soften, growth in spending for home improvements and repairs is expected to remain well above the market’s historical average of 5 percent,” said Abbe Will, associate project director of the Remodeling Futures Program. “In the first half of 2023, annual remodeling expenditures are still set to expand to nearly $450 billion.”