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Homeowners plan to continue taking on remodeling projects and renovations, demonstrating a clear vote of confidence in the housing market.
Harvard University’s Joint Center for Housing Studies’ Leading Indicator of Remodeling Activity (LIRA) projects renovation growth to exceed 8 percent into the 2017 home buying and selling season. The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI), similarly, recently increased four points to a level consistent with 2015.
“Homeowner remodeling activity continues to be encouraged by rising home values and tightening for-sale inventories in many markets across the country,” according to Chris Herbert, managing director of the Joint Center for Housing Studies. The LIRA anticipates remodeling activity will slow slightly later on in 2017.
“Even as remodeling growth trends back down,” however, “levels of spending are expected to reach new highs by the third quarter of next year,” said Abbe Will, research analyst at the Joint Center, in a statement on the LIRA. “At $327 billion annually, the homeowner improvement and repair market will surpass its previous inflation-adjusted peak from 2006.”
“Remodelers nationwide are seeing increased demand for major and minor addition jobs and calls for bids, leading to an increase in both future and market indicators,” said Tim Shigley, 2016 NAHB Remodelers Chair, in a statement on the RMI. “However, ongoing labor shortages continue to challenge their ability to meet the increased demand.”
“The Remodeling Market Index is consistent with NAHB’s forecast of gradual and steady improvements in residential remodeling activity,” added NAHB Chief Economist Robert Dietz. “This segment of our industry is being supported by rising home values and steady consumer confidence.”