CAMBRIDGE, MA -- After showing signs of recovery, spending on home improvements is expected to remain volatile and weak over the next several quarters, 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 LIRA is projecting that annual remodeling spending through the first quarter of 2012 will be down 4.0%. The Census Bureau's improvements spending series, to which the LIRA is benchmarked, was recently revised downwards as well.
"The recent slowdown in the economy has caused home improvement spending to weaken again," says Eric S. Belsky, managing director of the Joint Center. "Falling consumer confidence levels have undermined interest in discretionary remodeling projects."
"What looked to be a promising upturn in home improvement spending earlier this year has begun to stall," says Kermit Baker, director of the Remodeling Futures Program at the Joint Center. "Housing starts, existing home sales, and house prices have all been disappointing lately, which has dimmed prospects for home improvement spending gains this year."
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 October 20, 2011.
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.