Harvard Report: Remodeling Activity Appears to be Slowing

by devteam October 21st, 2011 | Share

ThernHarvard Joint Center for Housing Studies has released the latest LeadingrnIndicator of Remodeling Activity (LIRA) designed to estimate national homeownerrnspending on home improvements.  The LIRA,rnissued at the end of each quarter, projects the remodeling market for the quarterrnjust ended and the subsequent three quarters in order to help identify futurernturning points in the business cycle of the home improvement industry.  The information released on Thursday projectsrnremodeling activity through the first half of 2012 and anticipates a continuedrnsoftening of the remodeling market through most of that period.</p

Accordingrnto the indicator, approximately $116.8 billion was spent on home improvementsrnduring the third quarter of 2011, up from $114.2 billion in the secondrnquarter.  The four quarter moving rate ofrnchange in the third quarter was 4.5 percent. rnThe indicator predicts spending in the fourth quarter will decline to $111.0rnbillion and decline again to $105.0 billion in the first quarter of 2012 beforernrebounding to fourth quarter levels in Q2. rnThe moving average change will be -0.5 this quarter, -4.8 in Q1 and -3.5rnin Q2.</p


“After pulling through thernworst of the downturn in home improvement spending, we appear to be enteringrnanother period of softening,” according to Eric S. Belsky, managingrndirector of the Joint Center. “The ups and downs in the economy are beingrnreflected in home improvement activity.” </p

“Absent a more sustained upturnrnin the broader housing market, particularly in the sales of existing homes,rnthere’s not much to propel growth in home improvement spending,” saidrnKermit Baker, director of the Remodeling Futures Program at the Joint Centerrnwhich produced the report. “Homeowners are continuing to undertake smallerrnjobs, but are still nervous about larger discretionary projects.”

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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