First Quarter Remodeling Activity Leads to Predictions of Deceleration, Then Steadying

by Kacey Larsen

CAMBRIDGE, Mass.—The healthy gains in residential remodeling activity estimated for 2014 and the first part of 2015 are expected to decelerate, but then gain a little more traction by the end of the year, according to the Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects annual spending for home improvements will increase a more modest 2.9 percent in 2015.

“One of the largest contributors to this dampening of remodeling growth in 2015 is the sluggish existing home sales activity last year,” says Chris Herbert, managing director of the Joint Center. “Housing turnover typically sparks a significant improvement spending as new owners customize their recent purchases to fit their needs and, with sales down last year, remodeling will feel the effects this year.”

“Moving forward, signs of higher growth in remodeling activity include strengthening retail sales of building materials,” says Abbe Will, a research analyst in the Remodeling Futures Program at the Joint Center. “Also, rising home equity and still favorable interest rates continue to encourage owners to reinvest in their homes.”

More information on the most recent LIRA can be found here, and the biennial report, Improving America’s Housing –Emerging Trends in the Remodeling Market, can be found here. More information on the Harvard Joint Center for Housing Studies can be found here

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