Home Remodeling Growth Projections Extended

Home remodeling remains strongrnthroughout the country although it has begun to experience some of thernmoderation that has been predicted since late last year.  The Remodeling Futures Program at the JointrnCenter for Housing Studies of Harvard University said its LIRA (LeadingrnIndicator of Remodeling Activity) continues to show solid growth in the marketrnthis year but momentum should begin to moderate in the fourth quarter. </p

According to the Joint Center, “Sluggishnessrnin the housing market and specifically in home sales may result in arndeceleration of home improvement spending from double-digit annual growthrnthrough the third quarter to a year-over-year gain in the high single digits byrnthe end of the year.”</p

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The LIRA is a moving average 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

This is the second consecutive quarter</bthat the duration of the recovery anticipated by the LIRA has beenrnextended.   The model released in October 2013 anticipatedrna slowdown beginning in the second quarter of 2014.  That was extended to the third quarter in thernJanuary although the rate of that growth was downgraded from October estimates.  The Center now projects that growth in thernmoving average will continue into the third quarter, increasing 6 basis pointsrnto 14.5 percent.  It will then slow inrnthe fourth quarter, with spending decreasing from $158.9 billion to $153.1rnbillion, a decrease of 5.8 percentage points. </p