Home Remodeling Activity to Remain Weak Through First Half of 2012
CAMBRIDGE, MA – A sluggish economy and housing market will continue to hamper home improvement spending well into next year, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The remodeling market is expected to stay soft with the LIRA pointing to a modest decline in annual homeowner improvement spending over the next several quarters.
“After pulling through the worst of the downturn in home improvement spending, we appear to be entering another period of softening,” says 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,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center. “Homeowners are continuing to undertake smaller jobs, but are still nervous about larger discretionary projects.”
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 January 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 Joint Center for Housing Studies is Harvard University’s center for information and research on housing in the United States. Established in 1959, it is a collaborative unit affiliated with the Graduate School of Design and the Harvard Kennedy School. The Joint Center analyzes the dynamic relationships between housing markets and economic, demographic, and social trends, providing leaders in government, business, and the non-profit sector with the knowledge needed to develop effective policies and strategies. For more information, please visit www.jchs.harvard.edu.