Publication Date:
Tue, 2007-07-31 00:56
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CAMBRIDGE, MASS. – Even with the recent weakness in house prices and consumer confidence, growth in home improvement expenditures will hold stable in the low single digit range according to the leading indicator developed by Harvard’s Joint Center for Housing Studies.
According to the Leading Indicator for Remodeling Activity (LIRA), which builds on the Remodeling Activity Indicator that the Joint Center has been releasing since 1998, homeowner spending for home improvement activity will essentially remain constant through the first quarter of 2008. Overall growth in spending for 2007 is projected to be 3.0%. View Homeowner Remodeling Activity Graph [1]
“Homeowners continue to draw on built-up equity in their homes to finance home improvements,” explains Nicolas P. Retsinas, director of the Joint Center for Housing Studies. “However, the pace of spending remains moderate and tempered in the context of a very soft housing market.”
“Falling sales of existing homes, and depressed remodeling contractor sentiment remain negative factors in the outlook for the industry,” comments Kermit Baker, director of the Remodeling Futures Program of the Joint Center. “With borrowing costs remaining favorable, though, owners are still able to take advantage of the run-up in their house’s value over the past decade to finance home improvement projects.”
The LIRA is a new initiative from the Remodeling Futures Program to estimate future national remodeling activity with a horizon of three quarters. The LIRA replaces the Remodeling Activity Indicator (RAI) previously released by the Joint Center. The LIRA is released quarterly (April, July, October and January) by the Joint Center’s Remodeling Futures Program during the third week after each quarter’s closing. The next release date is October 18, 2007.
The Joint Center’s Policy Advisory Board and other industry sponsors support the Remodeling Futures Program. The development of the LIRA is detailed in a working paper entitled "N07-1: Developing a Leading Indicator for the Remodeling Industry."
Harvard’s Joint Center for Housing Studies is the nation’s leading 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. The Director of the Joint Center for Housing Studies is Nicolas P. Retsinas. For more information, the website is jchs.havard.edu.
