Home Improvement Spending Continues Toward More Moderate Growth

Reflecting the slow pace of recovery in the overall housing market, the home remodeling industry is expected to continue its path of moderating growth, 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 growth in home improvement spending to ease to 3.1 percent through the second quarter of 2015.


Note on LIRA model: An important change was made to the LIRA estimation model beginning with the first quarter 2014 release. With the upheaval in financial markets in recent years, the traditional relationship between interest rates and home improvement spending has significantly deteriorated. As a result, long-term interest rates have been removed from the LIRA estimation model.

LIRA is designed to estimate national homeowner spending on improvements for the current quarter and subsequent three quarters.  The indicator, measured as an annual rate-of-change of its components, provides a short-term outlook of homeowner remodeling activity and is intended to help identify future turning points in the business cycle of the home improvement industry. LIRA is released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University in the third week after each quarter’s closing. The next LIRA release date is January 15, 2015.

The Remodeling Futures Program, initiated by the Joint Center for Housing Studies in 1995, is a comprehensive study of the factors influencing the growth and changing characteristics of housing
renovation and repair activity in the United States. The program seeks to produce a better understanding of the home improvement industry and its relationship to the broader residential construction industry.

This article was originally written in the November 2014 issue of Professional Remodeler.
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