Home renovation and repair spending growth is expected to dip throughout 2020 and into 2021 as a result of the COVID-19 pandemic, according to the latest Leading Indicator of Remodeling Activity (LIRA) from the Joint Center for Housing Studies of Harvard University.
Remodeling growth saw a slowing down in 2019 compared to the year prior, in which spending growth averaged above 6%. Still, projections made prior to COVID-19 charted a rebounding throughout the year and into 2021. Remodeling activity was projected to grow from 0.3% in Q2 2020 to 3.9% by Q1 2021. New projects put that rate at -1.2% by early next year. It would be the first recorded negative growth rate in remodeling since the early 2000s.
"...the greatest downturn could come later in 2021 with recovery depending on what occurs in housing markets over the remainder of this year.”
“While there is still considerable uncertainty surrounding the near- and longer-term impacts of the pandemic, the best available evidence suggests substantial downturns in key remodeling indicators of new home construction, home sales and values of existing homes over the coming quarters,” said Chris Herbert, managing director of the Joint Center for Housing Studies, in the release that accompanied the latest LIRA. “Homeowners who are concerned about losses of income, home equity, and other forms of wealth are anxious about making large investments in improving their homes in this economic environment.”
In further estimating the future economic impact of COVID-19 on remodeling, Abbe Will, associate project director for JCHS's Remodeling Futures Program, added in the report that the worst of it may come later next year. “Beyond the start of next year, remodeling activity that would typically result from expanding homebuilding, sales of existing homes, and home prices mean the greatest downturn could come later in 2021 with recovery depending on what occurs in housing markets over the remainder of this year.”