JCHS: Modest Gains in 2025 Outlook for Home Remodeling

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, 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 that year-over-year spending for home renovation and repair will increase by 1.2 percent in 2025.

“A solid labor market, rising home values, and continued improvement in existing home sales are supporting greater activity in home remodeling and repair,” says Carlos Martín, Director of the Remodeling Futures Program at the Center. “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.”  

This LIRA release incorporates new benchmark data from the American Housing Survey that revises up the overall market size. “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 percent over these two years. The growth in actual spending was 7.5 percentage points higher than the gains originally estimated by the LIRA models over this period,” says Abbe Will, Associate Director of the Remodeling Futures Program. “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 percent, to $509 billion.”

Read more about the newly released benchmark data and changes to the projected LIRA market size.

The Leading Indicator of Remodeling Activity (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.

The 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 April 17, 2025.

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.

The Harvard Joint Center for Housing Studies strives to improve equitable access to decent, affordable homes in thriving communities. We conduct rigorous research to advance policy and practice, and we bring together diverse stakeholders to spark new ideas for addressing housing challenges. Through teaching and fellowships, we mentor and inspire the next generation of housing leaders.

Contact:

Kerry Donahue – Media Contact – kerry_donahue@harvard.edu – (617) 495-7640

Source: The Harvard Joint Center for Housing Studies