Home Remodeling Spending to Increase in 2012

Harvard Joint Center for Housing Studies predicts 5 percent increase in remodeling spending by Q3 2012 to $113.6B.

By Jason Knott
January 20, 2012
After a slow start, home improvement spending is expected to trend up in 2012, according to the Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.

If this momentum continues to build during the second half of 2012, remodeling activity is on course to end 2012 on a positive note.

“We’re beginning to see some hopeful signs in the economy, and the housing market is finally starting its slow recovery,” says Eric S. Belsky, managing director of the Joint Center. “That should prove helpful for home improvement spending as the year progresses.”

“Sales of existing homes have been increasing in recent months, offering more opportunities for home improvement projects,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center. “As lending institutions become less fearful of the real estate sector, financing will become more readily available to owners looking to undertake remodeling.”

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The study predicts home remodeling spending will reach $113.6 billion in the third quarter of 2012, which is actually down 0.2 percent from Q3 in 2011, but up 5 percent from the predicted spending for Q1 in 2012.

The Leading Indicator of Remodeling Activity (LIRA) is designed to estimate national homeowner spending on improvements for the current quarter and subsequent 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.

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