Remodeling, repair spending expected to slow
While home improvement and repair spending is expected to maintain a strong pace in 2022, the Joint Center for Housing Studies of Harvard University (JCHS) reports that growth could be “easing.”
Issued by the Remodeling Futures Program at the JCHS, the latest Leading Indicator of Remodeling Activity (LIRA) projects double-digit gains in annual homeowner renovation and maintenance expenditure will “top out” in the third quarter of 2022 before beginning a deceleration toward more sustainable rates of growth.
“Strong increases in home sales activity, household incomes, and home equity levels are supporting a faster expansion of the home remodeling market over the coming year,” said Carlos Martín, project director of the Remodeling Futures Program at the Center. “As owners continue to navigate the ups and downs of the pandemic’s trajectory, the focus on home improvements for changing wants and needs remains in sharp relief.”
“While annual owner improvement and repair spending could reach $430 billion by the second half of 2022, several headwinds may still temper growth expectations this year,” said Abbe Will, associate project director of the Remodeling Futures Program. “The rising costs of labor and construction materials, difficulty retaining contractors, and climbing interest rates could discourage owners from undertaking new or larger remodeling projects.”
The prior two LIRA releases reported spending projections using a smoothing technique to adjust for the immense growth rate volatility in several leading model inputs, which was largely an artifact of year-over-year comparisons to pandemic-induced lows.
As these shocks recede further in the past and inputs begin to stabilize, the Remodeling Futures Program said that it is reverting to its standard methods for projecting homeowner improvement and repair spending with this release.
The result of this change is somewhat higher growth rate projections than previously reported.
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.
For more information and details from the latest LIRA, click here.