The declines in owner spending on home improvements will moderate through the end of this year and first half of 2010 according to the Leading Indicator of Remodeling Activity (LIRA), released Oct. 15 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."
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 University in the third week after each quarter's closing. The next LIRA release date is Jan. 15.
For information, visit www.jchs.harvard.edu.