Home remodeling set for stronger growth this year

CAMBRIDGE, Massachusetts — Annual gains in spending for improvements and repairs to owner-occupied homes are expected to be modestly higher in 2021 compared to last year, according to the Leading Indicator of Remodeling Activity recently released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects an uptick in year-over-year growth of home renovations and repair expenditures from 3.5 percent at the close of 2020 to 3.8 percent by year-end 2021.

“The remodeling market continues to benefit from a strong housing market — including accelerating growth in homebuilding, sales and home equity,” said Chris Herbert, managing director of the Joint Center for Housing Studies. “In addition to routine replacement and repair projects, homeowners are likely to pursue more and larger discretionary home improvements this year as the broader economy recovers.”

“With the release of new benchmark data from the American Housing Survey, we’ve raised our projection for market size in 2021 by about $4 billion, or 1 percent, to $352 billion,” said Abbe Will, associate project director in the Remodeling Futures Program at the Center. “Spending in 2018 and 2019 was slightly more robust than previously estimated, growing 12.8 percent over these two years, compared to 11.5 percent as estimated.”

The LIRA provides a short-term outlook of national home-improvement and repair spending to owner-occupied homes. The indicator, measured as an annual rate of change of its components, is designed to project the annual rate of change in spending for the current quarter and subsequent four quarters, and is intended to help identify future turning points in the business cycle of the home-improvement and repair industry. Originally developed in 2007, the LIRA was re-benchmarked in April 2016 to a broader market measure based on the biennial American Housing Survey.

" The remodeling market continues be benefit from a strong housing market- including accelerating growth in homebuilding sales and home equitu "- Chris Herbert Joint Center for Housing Studies

The LIRA is released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University in the third week after each quarter’s closing. The next LIRA release date will be April 15.

The Remodeling Futures Program, initiated by the Joint Center for Housing Studies in 1995, is a comprehensive study of the factors influencing the growth and changing characteristics of housing renovation and repair activity in the United States. The program seeks to produce a better understanding of the home-improvement industry and its relationship to the broader residential construction industry.

The Harvard Joint Center for Housing Studies advances understanding of housing issues and informs policy. Through its research, education and public outreach programs, the center helps leaders in government, business and the civic sectors make decisions that effectively address the needs of cities and communities. Through graduate and executive courses, as well as fellowships and internship opportunities, the center also trains and inspires the next generation of housing leaders. For more information, visit jchs.harvard.edu.