Moderate Gains Forecast for Home Remodeling in 2021
CAMBRIDGE, MA — Moderate gains in homeowner spending for improvements and repairs are expected through much of next year as initial concerns of a possible pandemic-induced downturn have largely dissipated, according to the Leading Indicator of Remodeling Activity (LIRA), a short-term outlook of national home improvement and repair spending to owner-occupied homes.
The latest LIRA, released this month by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, projects annual growth in renovation and repair spending of 4.1% by the first quarter of 2021, with gains softening to 1.7% by the third quarter.
“The remodeling market is bouncing back from the initial shocks caused by the pandemic, as homeowners continue to spend significant time in their home and are adapting it for work, school and leisure,” said Chris Herbert, managing director of the Cambridge, MA-based Joint Center. “The surge in DIY and small project activity is lifting the remodeling market, but it remains to be seen if the strong sales market this summer translates into larger improvements that would drive even stronger growth in the coming quarters.”
Annual expenditures for renovation and repair of the owner-occupied housing stock are expected to rise from about their current level of $332 billion to $337 billion by the latter half of 2021, the Joint Center noted. While a softening of growth is projected in 2021, recent strengthening of home prices and sales activity, including second-home purchases, “could provide further boosts to remodeling and repair next year,” Harvard forecasters added.
“With refinancing activity surging, homeowners are investing in their homes, which is sustaining strong demand for remodeling,” said Tom Ashley, National Association of Home Builders Remodelers chair. “As a result of the rapid changes for work and the economy after the virus-induced recession, homes are serving multiple roles such as school, office and gym. This has directly increased the demand for improvements.”