The home improvement market appears to be in "another period of softening." A sluggish economy and housing market will keep home improvement spending levels low into 2011, 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 JCHS expects the remodeling market to stay soft and forecasts a modest decline in annual homeowner improvement spending over the next several quarters.
In fact, LIRA estimates third-quarter 2011 home improvement spending will be up 3.4%, but then foresees a drop of 0.5% in the fourth quarter and with progressively more significant decreases following.
"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 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.
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