Remodeling Spending Forecast for 2019

Remodeling spending will be slowing down in 2019, according to the Joint Center for Housing Studies of Harvard University's latest report.

The Leading Indicator of Remodeling Activity (LIRA) estimates that remodeling spending will hit a decade high in 2018, 7.7 percent, and then trend downward through the third quarter of 2019 to 6.6 percent. “Rising mortgage interest rates and flat home sales activity around much of the country are expected to pinch otherwise very strong growth in homeowner remodeling spending moving forward,” says Chris Herbert, managing director of the JCHS. “Low for-sale inventories are presenting a headwind because home sales tend to spur investments in remodeling and repair both before a sale and in the years following.”

LIRA provides a short-term outlook of national home improvement and repair spending to owner-occupied homes. The indicator, measured as an annual rate-of-change of its components, is designed to project the annual rate of change in spending for the current quarter and subsequent four quarters, and is intended to help identify future turning points in the business cycle of the home improvement and repair industry. Originally developed in 2007, the LIRA was re-benchmarked in April 2016 to a broader market measure based on the biennial American Housing Survey.

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