Joint Center: Home Remodeling Activity to Gain Steam through Mid-Year

Expenditures for home improvements should see healthy gains in 2016, the Joint Center for Housing Studies of Harvard University said.

The Center’s Leading Indicator of Remodeling Activity projects annual spending growth for home improvements should accelerate from 4.3 percent in the first quarter ($140.9 billion) to 7.6 percent in the third quarter ($154.8 billion).

By then, said, Joint Center Managing Director Chris Herbert, annual spending in nominal terms could to surpass the previous record in 2006 ($149.7 billion).

“2016 is looking to be a stronger year for home renovation activity compared to 2015 thanks to the continued recovery in the owner-occupied housing market,” Herbert said. “In most markets across the country, rising house prices are bringing more homes to the market and increasing sales, which is a large driver of home improvement activity.”

The LIRA uses the Department of Commerce’s Value of Construction Put in Place series, also known as the C-30, to project the value of residential improvements in the U.S.

Abbe Will, research analyst in the Remodeling Futures Program with the Joint Center, said the remodeling market has steadily improved in recent years with homeowners incorporating larger, more discretionary projects into their home improvement priorities.

“The real test this year will be whether the industry can clear ongoing bottlenecks in labor availability and consumer financing concerns to fully meet this increased demand,” Will said.