Annual spending on home improvement projects is expected to increase in the 50 largest U.S. metros in 2018, according to a new model from the Joint Center for Housing Studies of Harvard University (JCHS).
Not only does the model expect growth for all 50 metros, but it also anticipates growth by five percent or more in 41 of the metros. Eleven of these major metros: Kansas City, Charlotte, San Antonio, Dallas, and Sacramento; will see growth at or above 10 percent, per the JCHS model. The program's quarterly Leading Indicator of Remodeling Activity (LIRA) predicts national remodeling spending will increase by more than seven percent in 2018, meaning that overall growth is anticipated, as opposed to growth concentrated in certain regions or metro areas.
These new metro-level projections draw on over a year of research into what drives homeowner remodeling activity at the local level, an effort that relied on home improvement data from 1995-2015 in the Detroit, Chicago, Los Angeles, and Philadelphia metro areas. As the research note explains, about two-thirds of the variation in these metros’ historical growth rates is closely correlated with such factors as gains in local home prices, home sales activity, housing starts, retail sales of building materials, and remodeling permitting activity. Importantly, changes in these inputs also tend to lead remodeling activity by several quarters. Drawing on these findings, we developed a model to predict spending patterns in any metro for which we had reliable data on these inputs.