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Activity within the residential remodeling industry is expected to accelerate during the next three quarters as an uptick in sales activity equates to more buyers improving their newly purchased homes.
According to the Remodeling Futures Program at the Joint Center for Housing Studies at Harvard University, annual spending growth for home improvements will rise to 4 percent during the first quarter of 2016.
During the third and fourth quarters of this year, projections are for the industry to witness growth of 3.5 percent and 2.8 percent, respectively.
“Increasing sales this year should translate to stronger improvement spending gains next year,” said Chris Herbert, managing director of the Joint Center.
“Recent homebuyers typically spend about a third more on home improvements than nonmovers.”
According to Re/Max, June represented the most active month for U.S. home sales since 2008, with sales volume 12 percent higher than in June 2014. Markets that saw the largest year-to-year increase in sales included:
- Boise, Idaho
- Anchorage, Alaska
- Manchester, New Hampshire
- Baltimore, Maryland
- Tampa, Florida
The San Francisco Bay Area, along with Denver and Dallas-Fort Worth, should see overall spending on remodeling increase. Realtor.com recently ranked these metros as hottest markets — with each receiving two to three times more views per listing than the national average. These markets have also seen inventory move 25 to 40 days quicker than other locales.
Herbert pointed to several other signs that indicate remodeling activity will strengthen — rising home prices and sustained growth in the retail sales of home improvement projects.
“Rising home prices means rising home equity, which should encourage improvement spending by a growing number of owners,” said Abbe Will, a research analyst in the Remodeling Futures Program at the Joint Center.
Spanning June 2014 to June 2015, seven metros saw double-digit spikes in home values, suggesting overall remodeling activity should pick up in these markets. Locales that saw double-digit increases included:
- Denver, Colorado
- Miami, Florida
- Tampa, Florida
- Las Vegas, Nevada
- Portland, Oregon
- Fargo, North Dakota
- Manchester, New Hampshire
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