There has been a strong growth in home improvement and remodeling during the pandemic, and the most recent Leading Indicator of Remodeling Activity (LIRA) confirms that this will continue.
The Joint Center for Housing Studies of Harvard University's (JCHS) quarterly LIRA index measures short-term national spending for home improvement and repairs in owner-occupied homes. Just last week, JCHS released the most recent LIRA findings, which predicts steady growth for the fourth quarter of 2021 and even stronger growth through 2022.
Homeowner spending has surged, and the projections for the fourth quarter of 2021 look to increase to 9.2% from the third quarter’s 7.6%. This means a jump of $357 billion in quarter three to a projected $368 billion in homeowner spending in the fourth quarter.
“With these tailwinds, annual improvement and repair expenditures by homeowners could reach $400 billion by the third quarter of 2022,” said Abbe Will, associate project director of the Remodeling Futures Program, in a official announcement from JCHS. “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.”
JCHS explains that predictions for 2022 result from reviewing smoothed data from residential remodeling permits, single-family housing starts, and existing single-family home sales. Smooth data helps paint a more accurate picture of trends, which is especially important given the dramatic changes in the country's economy as we exit the pandemic.
If LIRA's predictions are accurate, the third quarter of 2022 would reach $401 billion in national homeowner spending, a $69 billion difference from the third quarter of 2020.