JCHS says home improvement spending will accelerate
The Joint Center for Housing Studies (JCHS) of Harvard University reported today that spending gains in home improvement and repairs will grow even larger in the second half of the year through mid-2022.
According to the latest Leading Indicator of Remodeling Activity (LIRA), projected annual growth in home renovation will reach 8.6% by the second quarter of 2022.
The JCHS said that home remodeling will likely grow at a faster pace given the ongoing strength of home sales, house price appreciation, and new residential construction activity.
A significant rise in permits for home improvements also indicates that owners are continuing to invest in bigger discretionary and replacement projects.
Larger gains in retail sales of building materials suggest the remodeling market continues to be lifted by DIY activity as well, the JCHS said. By the middle of next year, annual remodeling expenditures to owner-occupied homes are expected to surpass $380 billion.
But the JCHS noted that after the unprecedented changes to the US economy brought on by the pandemic, many economic indicators are showing extreme percent changes from pandemic-induced lows.
To reduce the immense growth rate volatility generated by year-over-year comparisons, the projection for 2022-Q2 utilizes smoothed data for two leading model inputs: residential remodeling permits and single-family housing starts. Using unsmoothed inputs in the LIRA model would have projected an unlikely annual growth rate roughly twice as large as reported.
The Remodeling Futures Program said it will continue to monitor input volatility.
The Leading Indicator of Remodeling Activity (LIRA) provides a short-term outlook of national home improvement and repair spending to owner-occupied homes.