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54 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Home Improvement Spending Projected to Grow in 2021 Contributing factors include "broad strength in house price appreciation, existing home sales, and residential construction," researchers said. R esearchers at the Joint Center for Housing Studies of Harvard University (JCHS) say spending on owner-occupied- home improvements is expected to grow in 2021 in most of the country's large metro areas, based on data from the center's Remodeling Futures Program. The report shows that, follow- ing a pandemic-related slowdown, annual home improvement spend- ing should increase from 1-13% in 42 major metropolitan areas. For four of the areas tracked, researchers expect it to decline by 1.5% or less. "Collectively, large metro areas are expected to see stronger remodeling gains in 2021 with an average growth of almost 5% com- pared to an estimated gain of 2% in 2020. Fully 14 metros are projected to see robust growth above 6% this year, while an additional 17 metros are set for moderate gains between 3 and 6%," Research Assistant Sophia Wedeen noted. "Broad strength in house price appreciation, existing home sales, and residential construction suggest that many metros will see greater renovation activ- ity this year," said Abbe Will, Associate Project Director in the Remodeling Futures Program at the Center. "The largest remodel- ing spending gains are projected to occur in relatively more af- fordable metros in the Sunbelt, with over 9% growth expected in Oklahoma City, Tucson, Charlotte, Phoenix, and San Antonio." "Although home remodeling is a bright spot in the economy overall, owner improvement spending is projected to contract slightly in a few high-cost metro- politan areas including New York, Denver, Boston, and San Jose," Weeden added. "While other higher-cost metros—Washington, D.C.; Miami; San Francisco; Los Angeles; and Seattle—are expected to have only modest levels of spending growth between 1 and 3% this year." The Remodeling Futures Program, initiated by the JCHS in 1995, is a comprehensive study of the factors influencing the growth and changing characteristics of housing renovation and repair activity in the United States. "The program seeks to produce a better understanding of the home improvement industry and its relationship to the broader residential construction industry," according to the center. Housing Market Kicks Off 2021 in Good Health The market has seen steady year-over- year increases in new and existing housing supplies. A ccording to BuildFax's January 2021 "Housing Health Report," single-family housing authorizations decreased just 0.36% from December 2020's totals, remaining relatively flat, partly attributed to rising building material costs and a lack of affordable lots. Despite the slight dip in month-over- month activity, new housing supply remains strong, with year-over-year activity up 9.89% and the trailing three-month outlook, covering the months of November 2020 to January 2021, up 11% despite a continued tight national housing supply. "Housing activity enters 2021 on a strong footing," said Jonathan Kanarek, Managing Director of BuildFax. "January marks the sixth month of year-over-year increases in new and existing housing supply, which should be welcome news for the broader economy." The report found that housing maintenance vol- ume and spending increased 8.37% and 17.87% respectively, year over year. Additionally, remodeling volume and expenses—a subset of main- tenance including home renovations, additions and alterations—increased 10.04% and 12.37% year over year, respectively. Homeowners were hesitant to enter the market in January, leading to new home inventory lows. Consequently, existing hous- ing activity remains strong as homeowners choose to invest in their properties rather than re-enter the market. "However, despite in- creasing new construction, homeowners are facing a severe housing shortage," Kanarek said. "Homebuyers are likely to face a competitive spring home- buying season, as sellers remain hesitant to re-enter the market, home prices soar and inter- est rates slowly tick upwards." BuildFax's "Housing Health Report" was compiled by examin- ing properties in the U.S. between the years 2013 and 2021. All data is seasonally-adjusted and imputed to reflect numbers representative of the entire country. "Homebuyers are likely to face a competitive spring homebuying season, as sellers remain hesitant to re-enter the market, home prices soar and interest rates slowly tick upwards." —Jonathan Kanarek, Managing Director, BuildFax