Qualified Remodeler Magazine

MAY 2018

Qualified Remodeler helps independent remodeling firms to survive, become more professional and more profitable by providing must-have business information, namely best business practices, new product information and timely design ideas.

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Page 9 of 67

he robust pace of spending on home renovations and repairs is expected to stay strong over the coming quarters, according to the Leading Indicator of Remodeling Activity (LIR A) released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. e LIR A projects that annual growth in homeown- er remodeling expenditures will remain above 7 percent throughout the year and into the first quarter of 2019. "Strengthening employment conditions and rising home values are encouraging homeowners to make greater investments in their homes," says Chris Herbert, managing director of the Joint Center for Housing Studies. "Upward trends in retail sales of building materials and the growing number of remodeling permits in- dicate that homeowners are doing more—and larger—improvement projects." "While the overall outlook is positive, one area of concern is the slowing growth in sales of existing homes, since sales traditionally trigger significant renovation spending by both sellers and buyers," says Abbe Will, associate project director for the Remodeling Futures Program at the Joint Center. "Even with this headwind, annual spending on residential improvements and repairs by homeowners is set to exceed $340 billion by early next year." e LIR A provides a short-term outlook of national home improvement and repair spend- ing for owner-occupied homes. e indicator, measured as an annual rate-of-change of its components, is designed to project the annu- al 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 LIR A was re-benchmarked in April 2016 to a broader mar- ket measure based on the biennial American Housing Survey. e LIR A is released in the third week after each quarter's closing. e next LIR A release date is July 19, 2018. Demand Expected to Remain Strong and Steady into 2019 MARKET UPDATE T continued NEWS Bathrooms overtake kitchens as most popular project Bathrooms overtook kitchens as the most popular remodel- ing project, according to a new survey released by the National Association of Home Builders (NAHB). NAHB released the sur- vey results, which highlight the most common remodeling proj- ects, to kick off National Home Remodeling Month in May. "Small-scale renovations are slowly becoming just as popular as large-scale projects, as seen with bathroom remod- eling becoming more common than kitchens," says 2018 NAHB Remodelers Chair Joanne Theunissen, CPG, CGR, a re- modeler from Mount Pleasant, Michigan. "Homeowners are finding cost-effective and shorter timeframe upgrades can also add comfort and value to their homes." In the survey, remodelers reported the most common proj- ects in 2017: • 81 percent bathroom remodeling • 78 percent kitchen remodeling • 49 percent whole-house remodeling • 37 percent room additions • 30 percent window/door replacements Additionally, a separate survey by NAHB showed that high-per- forming, low-emissivity (low-E) windows are the most common green-building product installed by residential remodelers; programmable thermostats and high-efficiency HVAC sys- tems also ranked highly. While remodeling is most commonly associated with kitchens and baths, green upgrades can save homeowners on utilities, improve air quality and increase the value of their homes. HOMEOWNER IMPROVEMENTS & REPAIRS FOUR-QUARTER MOVING TOTALS BILLIONS OF $ FOUR-QUARTER MOVING RATE OF CHANGE $267.0 $270.8 $274.7 $278.0 $279.1 $284.6 $290.6 $295.6 $297.7 $303.1 $309.0 $314.6 $318.0 $324.9 $331.4 $337.0 $341.0 2015-1 2 3 4 2016-1 2 3 2 3 4 4 2017-1 2 (P) 3 (P) 4 (P) 2018-1 2019-1 (P) 0% 2% 5 % 4 % 3% 7% 6 % 8% 9% 10% 225 2 75 2 5 0 3 2 5 3 0 0 3 75 3 5 0 425 400 1% 5.7% 5.5% 5.3% 5.1% 4.5% 5.1% 5.8% 6.3% 6.7% 6.5% 6.3% 6.4% 6.8% 7.2% 7.3% 7.1% 7.2% Historical Estimates LIRA Projections Note: Historical estimates since 2015 are produced using the LIRA model until American Housing Survey data became available. Source: Joint Center for Housing Studies Leading Indicator of Remodeling Activity—First Quarter 2018 10 May 2018 QR QualifiedRemodeler.com IN BRIEF

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