Home improvement and repair spending is expected to rise more sharply in 2022, but signs point to some moderation in growth through year-end, according to the Leading Indicator of Remodeling Activity (LIRA), released on Friday by the Remodeling Futures Program was published on the Joint Center for Housing Studies at Harvard University. The LIRA forecasts double-digit increases in annual homeowner renovation and maintenance spending, which will peak in the third quarter of 2022 before a slowdown to more sustainable growth rates begins.
“Strong gains in home sales, household income and home ownership share support faster expansion of the home remodeling market in the coming year,” said Carlos Martín, project leader of the center’s Remodeling Futures program. “As owners continue to navigate the ups and downs of the pandemic, the focus on home improvement for changing wants and needs remains greatly relieved.”
“While annual owner spending on improvements and repairs could reach $430 billion by the second half of 2022, some headwinds could still dampen growth expectations this year,” said Abbe Will, associate project director of the Remodeling Futures Program. “The rising costs of labor and building materials, difficulties in retaining contractors and rising interest rates could discourage owners from undertaking new or major remodeling projects.”
The previous two LIRA releases reported spending forecasts that used a smoothing technique to offset the immense growth rate volatility in several leading model inputs, which was largely an artifact of year-on-year comparisons to pandemic-related bottoms. As these shocks continue to recede in the past and inputs begin to stabilize, with this release the Remodeling Futures Program returns to its standard methods for forecasting homeowner improvements and repair spending. The result of this change is slightly higher growth forecasts than previously reported.
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