Modest remodeling growth expected in 2021
While remodeling spending is expected to rise in 2021, growth will not be as strong compared to the prior year.
Annual gains in spending for improvements and repairs to owner-occupied homes are expected to be modestly higher in 2021 compared to last year, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies (JCHS) of Harvard University.
The LIRA projects an uptick in year-over-year growth of home renovation and repair expenditure from 3.5% at the close of 2020 to 3.8% by year-end 2021.
“The remodeling market continues to benefit from a strong housing market—including accelerating growth in homebuilding, sales, and home equity,” says Chris Herbert, managing director of the JCHS. “In addition to routine replacement and repair projects, homeowners are likely to pursue more and larger discretionary home improvements this year as the broader economy recovers.”
But new data has prompted the JCHS to increase its estimated size of the overall remodeling market.
“With the release of new benchmark data from the American Housing Survey, we’ve raised our projection for market size in 2021 by about $4 billion, or 1%, to $352 billion,” says Abbe Will, associate project director in the Remodeling Futures Program. “Spending in 2018 and 2019 was slightly more robust than previously estimated, growing 12.8% over these two years compared to 11.5% as estimated.”
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.
Additional information about the newly released benchmark data and changes to the projected LIRA market size can be found here.