Remodeling industry shows signs of recovery

Homeowner improvement spending is likely to reach a cyclical bottom in the current quarter and steadily increase through 2010, according to the Leading Indicator of Remodeling Activity, which was released Jan. 21 by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.

The LIRA projects annual declines in home improvement spending will ease from the current rate of 12 percent to 3.1 percent in the third quarter of 2010.

"It appears we may be near the bottom of the current remodeling cycle," says Nicolas P. Retsinas, director of the Joint Center for Housing Studies. "With signs of stabilization in the national economy, homeowners are once again planning home-improvement projects."

Remodeling industry fundamentals are generally beginning to turn positive.

"Sales of existing homes are on the rise and home price declines are moderating in most markets across the country," says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies. "Financing costs are also favorable, although credit availability remains tight for many households."

The 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 LIRA is released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard in the third week after each quarter's closing. The next LIRA release date is April 15.

For information, visit www.jchs.harvard.edu.