Worried about how the economy might affect the wood products industry? Wood is in high demand right now, and industry experts are betting that homeowners are going remodel their houses like crazy in 2021.
The Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University projects annual growth in renovation and repair spending of 4.1% by the first quarter of 2021, softening to 1.7% by the third quarter.
““The remodeling market is bouncing back from the initial shocks caused by the pandemic, as homeowners continue to spend significant time in their home and are adapting it for work, school, and leisure,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “The surge in DIY and small project activity is lifting the remodeling market, but it remains to be seen if the strong sales market this summer translates into larger improvements that would drive even stronger growth in the coming quarters.”
“Annual expenditures for renovation and repair of the owner-occupied housing stock are expected to rise from about $332 billion today to $337 billion by the latter half of 2021,” says Abbe Will, associate project director in the Remodeling Futures Program at the Center. “While a softening of growth is projected in 2021, recent strengthening of home prices and sales activity—including second home purchases—could provide further boosts to remodeling and repair next year.”
Meanwhile, the National Association of Home Builders warns that the sky-high price of domestic lumber could drive up housing costs. Economic disruptions related to the COVID-19 pandemic dampened production while demand soared. Average lumber prices surged more than 170% since mid-April, reaching a record high over $800 per thousand board feet. NAHB economists say that has added over $16,000 to new single-family home prices. The group is calling on the White House to encourage more domestic lumber production to bring prices back down while supporting the industry.