CAMBRIDGE, MA — “Strong growth” in home improvement and maintenance spending is expected to continue in the coming year, according to the Leading Indicator of Remodeling Activity (LIRA), released last month by the Remodeling Futures Program at the Joint Center for Housing Studies at Harvard University.
LIRA projects year-over-year gains in annual improvement and repair spending will reach 9% in the fourth quarter of this year and maintain that pace into 2022. Annual improvement and repair spending by homeowners could reach $400 billion in the third quarter of 2022 , according to the Joint Center, which warned that “multiple headwinds” — including the rising costs of labor and building materials, as well as rising interest rates — “could still dampen expected growth.”
“Home remodeling continues to benefit from a strong housing market with elevated home building and sales activity and huge home price gains in markets across the country,” said Carlos Martín, project director of the Remodeling Futures Program at the Cambridge, MA-based Joint Center. “The rapid expansion of owners’ equity is likely to fuel demand for more and larger remodeling projects into next year.”
In related remodeling market news:
• The US building materials market will continue to build on its “exponential growth” of the past two years, gaining an additional 2.9% from 2023 to 2025, with the professional sector increasing by 4.6%, according to a newly released forecast from The Home Improvement Research Institute (HIRI). Indianapolis-based HIRI predicted the overall U.S. building materials market will increase 13% in 2021 from the previous year, when the professional sector grew 18.2%. The overall building materials market is expected to grow by a further 2.3% in 2022, with the professional sector growing by 7.1%, HIRI added.
• Companies in the home building and remodeling sector expect “strong activity” through the balance of 2021, although many companies report steady increases in backlogs since the start of the COVID-19 pandemic, along with wait times of nearly three months before new projects can begin according to the Q4 2021 Houzz Renovation Barometer, a quarterly gauge that tracks market expectations, project backlog and recent activity among U.S. firms in the construction and architect/design services sectors. The results of the survey were released last month by Houzz Inc., the Palo Alto, CA-based online home remodeling and design platform.
“Confidence prevails across the industry through the end of the year,” said Marine Sargsyan, Houzz senior economist. “We have seen some unwinding of home renovation and design activity following record performance earlier in the year, yet many firms are struggling to catch up with increased demand while navigating supply chain challenges and labor availability, leading to record backlogs.”
• Demand for remodeling remains strong, and remodelers are “doing quite well as long as they can adequately handle material and labor shortages,” according to the latest Remodeling Market Index (RMI) compiled by the National Association of Home Builders. NAHB last month released its NAHB/Royal Building Products Remodeling Market Index (RMI) for the third quarter of 2020, with a reading of 87, up five points from the third quarter of 2020. The finding “is a signal of home remodelers’ “confidence in their markets for projects of all sizes,” NAHB said.
“We see strong demand and continued optimism in the home remodeling market despite severe and widespread supply constraints,” said NAHB Chief Economist Robert Dietz.