Study: Remodeling Slow Now, Gets Better in Summer
CAMBRIDGE, Mass. – U.S. residential remodeling work in 2012 is looking better than initially expected, according to a Harvard University study group.
While the first quarter may be dull, activity should pick up in April and grow through the summer, as noted by the Remodeling Futures Program at the Joint Center for Housing Studies.
Click image to enlargeThe group’s Leading Indicator of Remodeling Activity (LIRA) four-quarter moving total predicts the third quarter will finish at $113.6 billion, only slightly off from the $113.8 billion seen after last year’s third quarter.
However, that’s after going through the $108.1 billion estimated for the current quarter –the lowest total since the second quarter of 2004.
“We’re beginning to see some hopeful signs in the economy, and the housing market is finally starting its slow recovery,” says Eric S. Belsky, managing director of the Joint Center. “That should prove helpful for home improvement spending as the year progresses.”
“Sales of existing homes have been increasing in recent months, offering more opportunities for home improvement projects,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center. “As lending institutions become less fearful of the real estate sector, financing will become more readily available to owners looking to undertake remodeling.”
The LIRA is designed to estimate national homeowner spending on improvements. The indicator 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 offers a running 12-month total, adjusted every quarter, that is used to anticipate developments in the next three quarters. While it tracks sales of certain materials used in remodeling, such as wood, the LIRA doesn’t take into account other allied products, such as hard surfaces for countertops and flooring.
The highest LIRA level came in 2007’s second quarter at $146.2 billion.
Get all the latest in the industry with The EDGE, the e-newsletter from Stone Update. Free subscriptions are available here.
