Joint Center: Remodeling Spending Expected to Accelerate into 2016

After several quarters of slackening growth, home improvement spending is projected to pick-up pace moving into next year, according to the Leading Indicator of Remodeling Activity from the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, Cambridge, Mass.  

The LIRA projects annual spending growth for home improvements will accelerate from 2.4 percent in the second quarter to 6.8 percent in second quarter 2016.  

“Home improvement spending continues to benefit from the last years’ upswing in housing market conditions including new construction, price gains and sales,” said Chris Herbert, managing director of the Joint Center. “Strengthening housing market conditions are encouraging owners to invest in more discretionary home improvements, such as kitchen and bath remodeling and room additions, in addition to the necessary replacements of worn components, such as roofing and siding.”  

LIRA estimates national homeowner spending on improvements for the current quarter and subsequent three quarters. The indicator, measured as an annual rate-of-change of its components, provides a short-term outlook of homeowner remodeling activity and is intended to help identify future turning points in the business cycle of the home improvement industry.  

“Although we expect remodeling activity to strengthen through the first half of 2016, further gains could be tempered,” says Abbe Will, a research analyst in the Remodeling Futures Program. “Current slowdowns in shipments of building materials and remodeling contractor employment trends, as well as restrictive consumer lending environments, are lowering remodeler sentiment and could keep spending gains in the mid-single digit range moving forward.”