Strong growth in home improvement and maintenance expenditures is expected to continue over the coming year, according to the latest Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies.
The LIRA—which provides a short-term outlook of national home improvement and repair spending to owner-occupied homes—projects year-over-year gains in annual improvement and repair spending will reach 9% in the fourth quarter and maintain that pace into 2022.
Residential remodeling continues to benefit from a strong housing market with elevated home construction and sales activity and immense house price appreciation in markets across the country, according to Abbe Will, a senior research associate and associate project director of the Remodeling Futures Program.
The rapid expansion of owners’ equity is likely to fuel demand for more and larger remodeling projects into next year, Will said.
With these tailwinds, annual improvement and repair expenditures by homeowners could reach $400 billion by the third quarter of 2022, the data shows.
Yet several headwinds could still taper the expected growth in remodeling spending including the rising costs of labor and building materials, as well as increasing interest rates, according to Will.
A year after the unprecedented changes to the US economy brought on by the pandemic, many economic indicators are showing extreme percent changes from pandemic-induced lows, Will said.
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