Dip in homeowner remodeling continues

The weak economy and uncertainty in housing markets remain key hurdles for remodeling activity, according to Harvard’s Joint Center for Housing Studies. The Leading Indicator of Remodeling Activity (LIRA) points to homeowner improvement spending declining at an annual rate of 12 percent by the second quarter of 2009.

“Falling home prices and job losses contribute to reduced spending on homeowner improvements,” explains Nicolas P. Retsinas, director of the Joint Center for Housing Studies, in the latest quarterly press release, dated Oct. 21, 2008. “Any remodeling rebound must be accompanied by stability in the housing market.”

“There are a few hopeful signs that we may be nearing a cyclical low point for home improvement activity,” notes Kermit Baker, director of the Remodeling Futures Program of the Joint Center. “Existing home sales appear to be stabilizing and interest rates for financing home improvements are favorable. However, other market indicators continue to deteriorate.”

The second quarter 2008 release introduced a re-benchmarked LIRA, which was necessitated by the recent discontinuation of the U.S. Census Bureau’s Residential Improvements and Repairs Statistics, also known as the C-50 series. The LIRA now projects future trends in homeowner improvement activity, where previously it estimated trends in both owner improvements and maintenance, as well as repairs.

The LIRA is released quarterly by the Joint Center’s Remodeling Futures Program during the third week after each quarter’s closing. The next release date was scheduled for Jan. 22.

The LIRA measures and projects only a portion of the U.S. home improvement market, namely spending by homeowners on property improvements. Other components of the broader market, such as homeowner maintenance and repairs, rental improvements, and rental maintenance and repairs, are not included in the LIRA figures.

The Joint Center for Housing Studies is Harvard’s center for information and research on housing in the United States. Established in 1959, the Joint Center is a collaborative unit affiliated with the Graduate School of Design and the Kennedy School of Government.

Contact: Joint Center for Housing Studies, Harvard University, 1033 Massachusetts Ave., Fifth Floor, Cambridge, MA 02138. Tel: 617-495-7908. www.jchs.harvard.edu