JCHS: The Remodeling Boom Could Reach A Climax In 2022

Spending on home improvements and repairs is expected to increase at a faster rate in 2022, but signs point to a slowing in growth by the end of the year, according to the Leading Indicator of Remodeling Activity (LIRA) released Friday by the Remodeling Futures Program at Harvard University’s Joint Center for Housing Studies.

According to the LIRA, double-digit gains in yearly homeowner renovation and maintenance expenditure would peak in the third quarter of 2022 before slowing to more sustainable rates of growth.

“Strong increases in home sales activity, household incomes, and home equity levels are supporting a faster expansion of the home remodeling market over the coming year,” said Carlos Martín, project director of the Remodeling Futures Program at the Center.

“As owners continue to navigate the ups and downs of the pandemic’s trajectory, the focus on home improvements for changing wants and needs remains in sharp relief.”

“While annual owner improvement and repair spending could reach $430 billion by the second half of 2022, several headwinds may still temper growth expectations this year,” Abbe Will, associate project director of the Remodeling Futures Program Stated.

“The rising costs of labor and construction materials, difficulty retaining contractors, and climbing interest rates could discourage owners from undertaking new or larger remodeling projects.”

The previous two LIRA releases presented spending forecasts using a smoothing technique to account for the enormous volatility in numerous leading model inputs, which was mostly an artifact of comparing year-over-year to pandemic-induced lows.

With this edition, the Remodeling Futures Program returns to its regular techniques for projecting residential improvement and repair spending when these shocks recede further in the past and inputs begin to stabilize.

As a result of this modification, growth rate forecasts are slightly higher than previously projected.