Spending on home improvements is expected to remain unpredictable and weak over the next several quarters according to the Leading Indicator of Remodeling Activity (LIRA), which was released by the Joint Center for Housing Studies (JCHS) at Harvard University today.
"What looked to be a promising upturn in home improvement spending earlier this year has begun to stall," said Kermit Baker, director of the Remodeling Futures Program at the JCHS. "Housing starts, existing home sales, and house prices have all been disappointing lately, which has dimmed prospects for home improvement spending gains this year."
The LIRA predicts annual spending on remodeling project to decrease 4% through the first quarter of 2012. The U.S. Census Bureau's improvements spending series, which the LIRA uses as a benchmark, was also recently revised downward.
"The recent slowdown in the economy has caused home improvement spending to weaken again," said Eric S. Belsky, managing director of the JCHS. "Falling consumer confidence levels have undermined interest in discretionary remodeling projects."
The LIRA is used to estimate national homeowner spending on improvements for the current quarter and the subsequent three quarters. The indicator is measured as an annual rate-of-change of its components and provides a short-term outlook of homeowner remodeling activity with the intention of identifying future changes in the business cycle of the home improvement industry.