It now appears likely that the numbers in the past two versions of a key report on America's home improvement activity and spending are skewed because of reporting issues stemming from the federal government's budget fights in 2011, the Census Bureau reported today. That issue in turn is prompting one of the nation's most authoritative sources on remodeling activity to revise its own estimates--numbers that it says show remodeling activity rising, not falling as government statistics indicate.
Government statisticians have concluded the numbers in the section of the 2011 American Housing Survey (AHS) dealing with home improvement costs most likely overstated reality, while the 2013 version of the same report underestimated how things were. As a result, Washington is urging users of the number to be cautious when they employ the numbers in their analyses of the state of the nation's remodeling market.
The User Note for AHS was posted roughly 2-1/2 months after the 2013 numbers went online. The new report began raising economists' eyebrows almost immediately back then because it declared home improvement activity in 2012-2013 had declined markedly from the 2010-2011 survey period. For instance, the reports indicated the number of projects performed by professionals had fallen by 20.4% to 59.7 million, while expenditures for jobs done by pros had shrunk by 15.9% to $248.06 billion. (See the relevant spreadsheets for the 2013 and 2011 reports.)
Blame timing issues, said the User Note's officers, who work at the Department of Housing and Urban Development (HUD) and at the Census Bureau.
In a typical survey year, the AHS interview period is from late April through September, User Note said. That was the case in 2013. But in 2011, the government collected the data in July through December. The User Note attributed that delay"to budgetary reasons; 2011 was the year in which the federal government nearly shut down several times because of fights over raising the debt ceiling, and ultimately Congress never passed an official budget for the fiscal year that started Oct. 1, 2011.
When you combine the delay in the 2011 survey with respondents' typical difficult remembering exactly when a project occurred, "estimates of home improvement in 2011 are likely higher than they would otherwise have been if the data collection window has remained constant between 2009, 2011, and 2013," the government said. "Subsequently, estimates in 2013 are likely lower than they would otherwise have been, for the same reason."
The User Note responds to concerns from organizations such as the Joint Center for Housing Studies (JCHS) at Harvard University. Its Remodeling Futures Program publishes the closely watched LIRA (Leading Indicator of Remodeling Activity), and on Jan. 29 it will issue the 2015 version of its major report on the status and future of remodeling nationwide.
JCHS' coming report will attempt to adjust for the feds' data-collection problems by extrapolating from data collected for a separate federal government survey of metro markets. The results generally will show growth rather than decline in remodeling activity. For example, the 2013 AHS estimates total improvement spending--including both pro and do-it-yourself work--totaled $302.81 billion for 2012 and 2013. JCHS' estimate of that same period is nearly 27% higher, at $384 billion. More numbers and the details behind them will be released in the Jan. 29 report.
The government's User Note said HUD "continues to explore the ramifications of the data collection period on the resulting home improvement estimates." In the meantime, it said, "Researchers comparing remodeling data between 2009 and 2011, and between 2011 and 2013, need to exercise caution in their interpretation of trends. At this time, users should not derive trends in home improvement projects completions (or other associated measure) between 2009, 2011, and 2013 due to the shift in data collection periods."
