Thursday, July 16, 2015

Pick-Up Projected in Home Improvement Activity Moving into 2016

by Abbe Will
Research Analyst
The extended easing of gains in residential improvement spending is expected to change course by early next year, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies. The LIRA projects annual spending growth for home improvements will accelerate to 4.0% by the first quarter of 2016 (Figure 1). 

Notes: (e) – estimated; (p) – projected.  Historical data from the second quarter 2014 onward is estimated using the LIRA. Source: Joint Center for Housing Studies of Harvard University.  

One strong signal of a pick-up in home improvement activity is the recent rise in home sales activity, since recent homebuyers typically spend about a third more on home improvements than non-movers, even after controlling for any age or income differences. In addition, rising home prices across the country mean rising equity, which should encourage improvement spending by homeowners.

The Leading Indicator of Remodeling Activity (LIRA) is designed to estimate national homeowner spending on improvements for the current quarter and subsequent three quarters. For more information about the LIRA, including how it is calculated, please visit the LIRA page on the Joint Center’s website. The LIRA is released by the Remodeling Futures Program at the Joint Center for Housing Studies in the third week after each quarter’s closing.

1 comment:

  1. You mentioned a rise in home sales, and I have noticed "For Sale by Owner" and realtor signs everywhere I look. Also, quite a few of the people I know who plan to stay in the current residence have a desire to remodel or redecorate their homes. I bet the traffic to every home improvement blog has increased exponentially lately as it seems everyone wants to relocate or redecorate. The public housing projects in my local area have been doing remodeling lately, as well as some of the other rental property locally. This along with home sales make it seem a very promising time for home contractors and home improvement stores in the area.