The more that homeowners spend on remodeling, the better for the housing market overall and the economy. So it’s good news that one prominent indicator — from the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University — projects that these projects will accelerate in 2016.
The program’s Leading Indicator of Remodeling Activity (LIRA) projects annual spending growth for home improvements will accelerate from 4.3 percent in the first quarter of 2016 to 7.6 percent in the third quarter. By then, the level of annual spending in nominal terms is anticipated to surpass the previous peak set in 2006.
“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,” says Chris Herbert, Managing Director of the Joint Center for Housing Studies. “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 remodeling market has grown in recent years along with the housing market recovery. “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,” says Abbe Will, Research Analyst in the Remodeling Futures Program at the Joint Center for Housing Studies.
See chart below.