The industry expects a robust year for remodeling in 2022, according to the Leading Indicator of Remodeling Activity (LIRA), which reported strong growth in home improvement and maintenance spending.
LIRA, released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, projects that year-over-year gains in annual improvement and repair spending will reach 9% in Q4, maintaining that pace into 2022.
The Leading Indicator of Remodeling Activity (LIRA) provides a short-term outlook of national home improvement and repair spending to owner-occupied homes.
According to the report, many economic indicators are showing extreme percent changes from pandemic-induced lows. To mitigate the growth rate volatility generated by these year-over-year comparisons, LIRA projections used smoothed data for three leading model inputs: residential remodeling permits, single-family housing starts and existing single-family home sales.
“Residential remodeling continues to benefit from a strong housing market with elevated home construction and sales activity and immense house price appreciation in markets across the country,” said Carlos Martín, project director of the Remodeling Futures Program at the Center, in a statement. “The rapid expansion of owners’ equity is likely to fuel demand for more and larger remodeling projects into next year.”
According to Abbe Will, associate project director of the Remodeling Futures Program, annual improvement and repair expenditures by homeowners could reach $400 billion by the third quarter of next year.
“Yet there are several headwinds that could still taper the expected growth in remodeling spending including the rising costs of labor and building materials, as well as increasing interest rates,” Will added.