Remodeling Recovery to Strengthen by Year’s End
After two years of bouncing around a bottom, remodeling activity is expected to pick up later this year, according to the Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, Cambridge, Ma.. Why?Stronger pending home sales and continuing low interest rates are contributing to the rise. The LIRA projects annual spending will see healthy growth in 2012, ending the year up 5.9 percent.
“Hopefully, we’re finally moving beyond simple volatility in the home improvement spending numbers to a period of sustained growth,” says Eric Belsky, managing director of the Joint Center. “The recent upturn we’ve seen in home sales should translate into more remodeling activity later this year.”
“Unusually mild weather this past winter in many parts of the country accelerated the pace of homebuilding and home improvement activity,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center. “This may produce a brief pause in remodeling activity this quarter, but then a strengthening economy should provide a foundation for continued growth moving forward,” he adds
The Leading Indicator of Remodeling Activity (LIRA) is designed to estimate national homeowner spending on improvements for the current quarter and subsequent three quarters. The indicator, measured as an annual rate-of-change of its components, 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 development of the LIRA is detailed in “Developing a Leading Indicator for the Remodeling Industry” (JCHS Research Note N07-1). In July 2008, the LIRA was re-benchmarked due to changes in the underlying reference series. These changes are explained in “Addendum to Research Note N07-1: Re-Benchmarking the Leading Indicator of Remodeling Activity” (JCHS Research Note N08-1). The LIRA is released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University in the third week after each quarter’s closing. The next LIRA release date is July 19, 2012.
The Remodeling Futures Program, initiated by the Joint Center for Housing Studies 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.
The Harvard Joint Center for Housing Studies advances understanding of housing issues and informs policy. For information, visit www.jchs.harvard.edu.