Study Predicts Remodeling Trade Gets 2010 Bounce
The group’s Leading Indicator of Remodeling Activity (LIRA) suggests that annual spending levels should start to rise in the beginning of next year, causing year-over-year declines to shrink to 8.9 percent by the second quarter of 2010.
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“Remodeling spending by homeowners shows early signs of stabilization,” says Nicolas P. Retsinas, director of the Joint Center for Housing Studies. “While the housing recovery has been erratic, a strengthening economy could produce spending increases on home improvement projects by the second quarter of next year.
LIRA is designed to estimate national homeowner spending on improvements for the current quarter and subsequent three quarters. The indicator provides a short-term outlook of homeowner remodeling activity and helps identify future turning points in the business cycle of the home-improvement industry.
Some positive signs for the industry are emerging.
“Favorable financing costs – for those households with access to credit – and a pickup in homes sales are producing more opportunities for home-improvement projects,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies.
Several factors, however, still impede remodeling growth. “A generally weak housing market with unstable prices, near record levels of foreclosures, and other distressed sales are discouraging households from undertaking nonessential remodeling projects,” Baker added.
The Joint Center for Housing Studies is Harvard University’s center for information and research on U.S. housing, and is affiliated with the Graduate School of Design and the Harvard Kennedy School.