Spending on big-ticket home remodeling projects will continue to rise at a double-digit pace well into this year, the Joint Center for Housing Studies (JCHS) of Harvard University forecast today. Its Leading Indicator of Remodeling Activity (LIRA) predicts $153.8 billion worth of expenditures on major remodeling projects over the 12-month period ending Sept. 30.
“The ongoing growth that we’ve seen in home prices, housing starts, and existing home sales is also being reflected in home improvement activity,” said Eric S. Belsky, managing director of the Joint Center, in a JCHS news release. “As owners gain more confidence in the housing market, they are likely to undertake home improvements that they have deferred.”
"However, the strong growth for this cycle may start to ebb a bit beginning around midyear,” added Kermit Baker, director of JCHS' Remodeling Futures Program. Indeed, the newest LIRA says the rolling four-quarter rate of change will show 14% growth through this quarter and a 14.7% increase through 2014's second quarter before slowing to a 9.9% increase for the four quarters ending this Sept. 30.
“By that time, we’ll be approaching the pre-recessionary levels of spending, and with borrowing costs starting to creep back up, growth rates are likely to slow some,” Baker said.
LIRA focuses on home improvements that cost at least $500. The $153.8 billion in expected spending excludes spending on minor maintenance projects as well as all spending by landlords on their rental properties.