Remodeling Picks Up in 2010
The Remodeling Futures Program at the Joint Center for Housing Studies shows an increase in its Leading Indicator of Remodeling Activity (LIRA) for 2010’s third and fourth quarters.
The LIRA suggests annual spending will accelerate, with nearly five-percent growth overall this year.
“The gradual recovery in the broader economy should encourage more remodeling spending by homeowners,” says Nicolas P. Retsinas, director of the Joint Center for Housing Studies. “This year could produce the first annual spending increase for the industry since 2006.”
Favorable market conditions support the projected increase in remodeling activity.
“With house prices showing modest gains in most markets and the employment outlook beginning to stabilize, owners are likely to refocus attention on home improvements,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies. “Home sales are trending up, which shows growing confidence in the housing market.”
The LIRA is designed to estimate national homeowner spending on improvements. The indicator provides a short-term outlook of homeowner remodeling activity and is intended to help identify future turning points in the business cycle of the home-improvement industry.
The LIRA offers a running 12-month total, adjusted every quarter, that is then used to anticipate developments in the next three quarters.
Unfortunately, the current LIRA – reported from this year’s first quarter – shows remodeling is at a seven-year low. The projected LIRA (previous 12-month total) for the end of June will be $106.5 billion, the lowest since the first quarter of 2004.
However, the LIRA for the third and fourth quarters, at $111 billion and $121.5 billion respectively, offer an positive trend for the rest of the year. The 4.9-percent projected overall remodeling growth for 2010 would be the first positive calendar-year increase since 2006.
The highest LIRA level came in 2007’s second quarter at $146.2 billion.
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