With home sales picking up and contractors seeing more positive business conditions in the future, remodeling activity in the United States is in a position to see accelerated growth by the end of 2012 and into 2013, 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 suggests that annual homeowner improvement spending may reach double-digit growth by the first quarter of 2013.
The Joint Center reports that homeowner improvements (four-quarter moving totals) were at $113.6 billion in the second quarter of 2012. It projects a slight rise in the third quarter of 2012, followed by two big quarterly jumps that will take the total to $128.9 billion in the first quarter of 2013.
"Warm weather in the first quarter temporarily bumped up remodeling activity in many areas," said Eric S. Belsky, managing director of the Joint Center. "By the end of the year, however, positive market fundamentals are expected to kick in, moving the industry out of this ebb and flow period and into a new growth phase."
"Home improvement activity has been bouncing around the bottom of this cycle for almost three years now, waiting for the industry to get some traction," says Kermit Baker, director of the Remodeling Futures Program at the Joint Center. "Now, the combination of low financing costs, stronger consumer confidence, improving home sales, and the perception that home prices have stabilized in most markets across the country are encouraging owners to start working on the list of home improvement projects they have been putting off. "
The Leading Indicator of Remodeling Activity (LIRA) is designed to estimate national homeowner spending on improvements for the current quarter and next three quarters. The indicator, measured as an annual rate-of-change of its components, provides a short-term outlook of homeowner remodeling activity and helps identify future turning points in the business cycle of the home improvement industry.
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