The strong growth in the home remodeling
market which began in the second quarter of 2013 will continue through the
first half of 2014 according to LIRA, the Leading Indicator of Remodeling
Activity. LIRA is a tool developed by
the Remodeling Futures Program at the Joint Center for Housing Studies at
The current LIRA projection extends the
expected remodeling boom out into the future by an additional quarter beyond
projections issued in October. The rate
of that growth has been downgraded however from October estimates.
LIRA now expects that double digit gains
in spending will continue through the first half of the year and then moderate
to just under 10 percent by the third quarter.
However, a gain of 15.9 percent in the three month moving average to $146.1
billion originally predicted for Q4 2013 is now put at 11.4 percent and $140.4
Looking forward the new projections are
also more restrained. The original
estimate of a 17.3 percent moving average increase in the first quarter is now
14.0 percent and 16.2 percent in Q2 has become 14.7 percent. By the
end of the second quarter LIRA estimates home improvement spending at $147.6
billion before growth moderates to a moving average of 9.9 percent in Q3.
"The ongoing growth that we've seen
in home prices, housing starts, and existing home sales is also being reflected
in home improvement activity," says Eric S. Belsky, managing director of the
Joint Center. "As owners gain more confidence in the housing market, they
are likely to undertake home improvements that they have deferred."
"However, the strong growth for this
cycle may start to ebb a bit beginning around midyear," says Kermit Baker,
director of the Remodeling Futures Program at the Joint Center. "By that
time, we'll be approaching the pre-recessionary levels of spending, and with
borrowing costs starting to creep back up, growth rates are likely to slow
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.