Home remodeling growth to soften through 2011

CAMBRIDGE, MA – A still-stalled housing recovery and concern over the pace of economic growth nationally are likely to generate only modest gains in home improvement spending this 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 LIRA projects annual growth slowing throughout the year with spending up only 0.2% in 2011.

"Given all the economic uncertainty that we’re seeing nationally, the home improvement recovery is expected to be rocky," says Eric S. Belsky, managing director of the Joint Center. "Spending patterns through the remainder of the year are expected to reflect recent volatility in the housing market."

According to Kermit Baker, director of the Remodeling Futures Program at the Joint Center, “Recent softness in the housing market and continued pessimism among remodeling contractors point to a slowdown in the remodeling market toward the end of the 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 July 21, 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.
SOURCE: Joint Center for Housing Studies

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