Home Improvement Spending to Level in mid-2014

LIRA, a forward looking indicator ofrnremodeling activity, continues to project a double digit annual increase inrnhome improvement spending through this quarter and the first quarter of 2014,rnbut cautions it expects a slowdown thereafter. rnLIRA (Leading Indicator of Remodeling Activity) has projected strong increasesrnsince the second quarter of this year, moving from an estimated $128.4 billionrnin the second quarter to $140.0 billion in the third and $146.1 billion thisrnquarter.  As a moving average thesernincreases translate to increases of 10.4 percent in the third quarter and, 15.9rnpercent in the fourth.</p

LIRA is a creation of the Joint Centerrnfor Housing Studies at Harvard University.  It is designed tornestimate national homeowner spending on improvements for the current quarterrnand subsequent three quarters. The indicator, measured as an annualrnrate-of-change of its components, provides a short-term outlook of homeownerrnremodeling activity and is intended to help identify future turning points inrnthe business cycle of the home improvement industry.  </p

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Looking forward, the projection forrnspending in the first quarter of 2014 is $148.9 billion, movement of 17.3rnpercent.  Then spending will level offrnand drop slightly to a projected total of $147.9 billion in the second quarter,rna moving average of 15.2 percent.</p

 “The soft patch that homebuilding has seen inrnrecent months, coupled with rising financing costs, is expected to be reflectedrnas slower growth in home improvement spending beginning around the middle ofrnnext year,” says Eric S. Belsky, managing director of the Joint Center. rn”However, even with this projected tapering, remodeling activity should remainrnat healthy levels.”</p

 “In the near term, homeownerrnspending on improvements is expected to see its strongest growth since thernheight of the housing boom,” says Kermit Baker, director of the RemodelingrnFutures Program at the Joint Center.  “Existing home sales are stillrngrowing at a double-digit pace, and rising house prices are helping homeownersrnrebuild equity lost during the housing crash.”

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