Harvard Report: Remodeling Activity Appears to be Slowing


Harvard Joint Center for Housing Studies has released the latest Leading
Indicator of Remodeling Activity
(LIRA) designed to estimate national homeowner
spending on home improvements.  The LIRA,
issued at the end of each quarter, projects the remodeling market for the quarter
just ended and the subsequent three quarters in order to help identify future
turning points in the business cycle of the home improvement industry.  The information released on Thursday projects
remodeling activity through the first half of 2012 and anticipates a continued
softening of the remodeling market through most of that period.

to the indicator, approximately $116.8 billion was spent on home improvements
during the third quarter of 2011, up from $114.2 billion in the second
quarter.  The four quarter moving rate of
change in the third quarter was 4.5 percent. 
The indicator predicts spending in the fourth quarter will decline to $111.0
billion and decline again to $105.0 billion in the first quarter of 2012 before
rebounding to fourth quarter levels in Q2. 
The moving average change will be -0.5 this quarter, -4.8 in Q1 and -3.5
in Q2.

“After pulling through the
worst of the downturn in home improvement spending, we appear to be entering
another period of softening,” according to Eric S. Belsky, managing
director of the Joint Center. “The ups and downs in the economy are being
reflected in home improvement activity.”

“Absent a more sustained upturn
in the broader housing market, particularly in the sales of existing homes,
there’s not much to propel growth in home improvement spending,” said
Kermit Baker, director of the Remodeling Futures Program at the Joint Center
which produced the report. “Homeowners are continuing to undertake smaller
jobs, but are still nervous about larger discretionary projects.”

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