Declines in home improvement spending will moderate through the end of 2009 and first half of 2010 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.
The indicator suggests the remodeling industry is turning a
corner. 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.
“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.”
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.”
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 Joint Center for Housing Studies is Harvard University’s
center for information and research on housing in the U.S.