Remodeling Market Expected to Stall in 2020

Remodeling Market Expected to Stall in 2020

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Leading Indicator of Remodeling Activity, Third Quarter 2019. (Joint Center of Housing Studies, Harvard University)
November 12, 2019 from Floor Trends
Cambridge, Mass. — Annual gains in homeowner spending for improvements and repairs are set to give out by the second half of next year, according to the Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that annual home improvement and maintenance expenditures will post a modest decline of 0.3% through the third quarter of 2020.

“Continued weakness in existing home sales and new construction will lead to sluggish remodeling activity next year,” said Chris Herbert, managing director of the Joint Center for Housing Studies. “Slowdowns in other key indicators of improvement spending—project permitting, sales of building materials, and home prices—also suggest the remodeling market may be reaching a turning point.”

Abbe Will, associate project director in the Remodeling Futures Program, added, “At $325 billion, owner improvement and repair spending in the coming year is expected to essentially remain flat compared to market spending of $326 billion over the past four quarters. However, today’s low mortgage interest rates may help counter some of these headwinds, which could buoy home improvement expenditure over the coming year.”

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 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 is Jan. 16, 2020.

For more information, visit www.jchs.harvard.edu.