Leading Indicator of Remodeling Activity Points to Moderate Growth in 2025

The Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University recently released its Leading Indicator of Remodeling Activity (LIRA) report.

The LIRA reported that after two years of decline, annual expenditures for improvements and maintenance to owner-occupied homes are expected to grow at a mild pace throughout 2025. The LIRA projects that year-over-year spending for home renovation and repair will increase 1.2% in 2025.

The 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.

Commenting on the latest LIRA report, Carlos Martín, Director of the Remodeling Futures Program at the Center, said:

“A solid labor market, rising home values, and continued improvement in existing-home sales are supporting greater activity in home remodeling and repair. Upward trending retail sales of building materials and steady permitting for remodeling indicate that homeowners are slowly but surely expanding the pace and scope of projects compared to the last couple years.”

Noting that this LIRA release incorporates new benchmark data from the American Housing Survey that revises up the overall market size, Associate Director of the Remodeling Futures Program Abbe Will added:

“In the wake of the pandemic, strong gains in homeownership, record high home values and equity, and a healthy economy combined to lift improvement and repair spending to unprecedented heights in 2022 and 2023, growing 25.3% over these two years. The growth in actual spending was 7.5% points higher than the gains originally estimated by the LIRA models over this period. While expenditures are expected to grow only modestly this year, we’ve increased our projection for the remodeling market size in 2025 by $30 billion, or 6.4%, to $509 billion.”