The latest Leading Indicator of Remodeling Activity release projects national spending for home remodeling and repairs will grow to $331 billion in 2019, an increase of 5.5 percent from last year, writes Abbe Will of Harvard University’s Joint Center for Housing Studies. This LIRA release also updates and revises historical spending levels and growth due to the incorporation of new benchmark data from the recently released 2017 AHS.
The LIRA provides a short-term outlook of national home improvement and repair spending to owner-occupied homes and is benchmarked to national spending estimates from the US Department of Housing and Urban Development’s American Housing Survey (AHS).
Compared to last quarter’s LIRA release, the updated LIRA now shows lower market size estimates and projections for remodeling and repair activity in 2018, 2019, and the first half of 2020.
According to tabulations of the AHS, spending in 2016 and 2017 was not nearly as robust as the LIRA model predicted, growing only 5.4 percent from $278 billion in 2015 to $292 billion in 2017 compared to LIRA estimated growth of 11.9 percent over this time period. As seen in the chart, the lower growth in benchmark remodeling and repair spending in 2016 and 2017 has implications for the size of the market projected by the LIRA model for 2018, 2019, and 2020.
Previously, the LIRA estimated a homeowner improvement and repair market size of $336 billion in 2018 and projected that spending would grow to $353 billion in 2019. With the replacement of AHS-based benchmark data for previously modeled estimates, the LIRA model indicates remodeling activity reached $313 billion in 2018 and projects spending will reach $331 billion this year. The implication of slower growth in actual remodeling and repair spending over 2016 and 2017 is a reduction in market size projections for 2019 of 6.3 percent or $22 billion.
In 2016, the LIRA was re-benchmarked to a measure of home improvement and repair spending based on estimates from HUD’s biennial American Housing Survey. Once every two years, with new historical AHS data, the LIRA benchmark series will also be updated. Beginning with the July 2019 release, the LIRA model will be used to estimate historical spending levels since 2017 until the next biennial release of the American Housing Survey allows for actual 2018 and 2019 spending data to replace modeled estimates.
More detailed analysis of recent and expected trends in home improvement and repair activity is available in the latest Improving America's Housing report released earlier this year. See https://www.jchs.harvard.edu/research-areas/reports/improving-americas-housing-2019
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