Forward Indicator Predicts Rapid Rise in Remodeling by Year End.

After two years of bouncing around a bottom, remodeling activity is expected to pick up later this year, 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.  Stronger pending home sales and continuing low interest rates are contributing to the rise. The LIRA projects annual spending will see healthy growth in 2012, ending the year up 5.9 percent.

The Joint Center produces the Leading Indicator of Remodeling Activity (LIRA) each quarter.  It is designed to estimate national homeowner spending on improvements for the current quarter and the following three quarters.  The indicator, measured as an annual rate-of-change of its components, provides a short-term outlook of homeowner remodeling activity and is intended to help identify future turning points in the business cycle of the home improvement industry.

Spending in the first quarter was expected to be $112.4, down from $115.8 billion in the fourth quarter of 2011 but the moving average was projected to rise 1.4 percent.  In the second quarter expenditures are projected to be $113.0 billion with the moving average down 1.1 percent.  In the third quarter both spending and the moving average will begin to rise - to $113.9 billion, up 0.1 percent before taking off in the fourth quarter when expenses are projected to be $122.6 billion, an increase in the average of 5.9 percent.

"Hopefully, we're finally moving beyond simple volatility in the home improvement spending numbers to a period of sustained growth," says Eric S. Belsky, managing director of the Joint Center.  "The recent upturn we've seen in home sales should translate into more remodeling activity later this year."

"Unusually mild weather this past winter in many parts of the country accelerated the pace of homebuilding and home improvement activity," says Kermit Baker, director of the Remodeling Futures Program at the Joint Center.  "This may produce a brief pause in remodeling activity this quarter, but then a strengthening economy should provide a foundation for continued growth moving forward."