Home Remodeling Spending to Grow 20% in 2013
Now with momentum in starts finally starting to build, there’s news that remodeling growth is picking up steam as well.
The Leading Indicator of Remodeling Activity (LIRA), released by Harvard’s Joint Center for Housing Studies (JCHS), points towards a strong rebound in home improvement activity during 2013. The JCHS report documented robust spending throughout the second half of 2012, and the LIRA projects annual homeowner improvement spending will see accelerating double-digit growth through at least the third quarter of 2013.
The LIRA is compiled by analyzing recent trends in eight specific indicators of market activity (e.g., housing starts, pending home sales, retail sales at building supply stores, etc.) which together have historically had strong correlations to remodeling spending. After weighting the components to reflect their relative correlation and lead times with respect to historical remodeling spending trends, the factors are applied to develop a forecast of near-term changes in the market.
Related: Housing Starts Strong in Dec. 2012
Summarizing the latest LIRA report, Kermit Baker, director of the Remodeling Futures Program at the JCHS, says that “… the solid momentum behind home building activity, existing home sales, low financing costs and remodeling contractor sentiment all point to a solid start to the new year for home improvement spending.”
By the third quarter of 2013, spending for home improvement projects is expected to be growing at an annualized rate of 19.7 percent, with the dollar value of activity projected to reach an annualized total of $145.5 billion.