The housing market is, slowly but surely, starting to recover. However, a recent report from the Leading Indicator of Remodeling Activity (LIRA), which was released by the Remodeling Futures Program at the Joint Center for Housing Studies for Housing Studies of Harvard University, found that annual growth in home improvement will shrink from 6.3 percent in the first quarter to 1.6 percent in the third.
“Due in part to weakening home sales last year, growth in remodeling spending is expected to deflate somewhat in 2015,” says Chris Herbert, Managing Director of the Joint Center. “Homeownership rates continue to slide as lending remains tight and first-time homebuyers are not yet returning to the market.”
“Although contractor sentiment has cooled in recent quarters, it remains favorable overall,” says Abbe Will, a research analyst in the Remodeling Futures Program at the Joint Center. “House price gains are moderating but still strong and home sales appear to be turning a corner now, all of which bodes well for continued, if more moderate, home improvement gains for 2015.”
As a note on the LIRA model, beginning with the first quarter 2014 release, long-term interest rates were removed from the LIRA estimation model. For more information on the reasons for and implications of this change, please visit the Housing Perspectives blog.
On Thursday, January 29, the Joint Center for Housing Studies will release its latest biennial report on the remodeling industry, Improving America’s Housing: Emerging Trends in the Remodeling Market. While the report said we are almost entirely recovered from the recent downturn, it identifies the remodeling industry segments that will support further growth in the years ahead. There will be a live webcast release Jan 29 at 12:00 p.m. Eastern. For information, visit www.jchs.harvard.edu/research/improving-americas-housing.