Spending on major remodeling projects nationwide should increased substantively in 2011 after three years of declines, the Joint Center for Housing Studies of Harvard University forecast today. The center's Leading Indicator of Remodeling Activity (LIRA) indicates spending in the four quarters ending March 31, 2011, will total $128.2 billion, up 11.8% from the previous four quarters, and the pace should increase even more as the year progresses.
"The downturn in home improvement activity has pushed spending below its long-term trend," Eric S. Belsky, managing director of the Joint Center for Housing Studies, said in a statement. "A recovering economy should stabilize house prices and consumer confidence levels, encouraging homeowners to reinvest in their homes and undertake deferred repairs and replacements."
LIRA measures only spending on major household remodeling projects, such as kitchen and bath jobs. It excludes routine maintenance and all spending by landlords on rental housing.
The latest LIRA represents a slight pullback from the center's second-quarter numbers. In that earlier report, the center said the LIRA showed spending of $117.6 billion for the four quarters ending this Dec. 31, up 5% from calendar 2009, while spending in the four quarters ended March 31, 2011, would total $128.8 billion, up 12.4% from the previous four quarters. Now those have been trimmed to $115.5 billion and $128.2 billion, respectively.
"Remodeling contactors are feeling much more positive about the outlook for home improvement projects," said Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies. "Low financing costs and a wave of previously foreclosed homes coming back on the market and in need of renovation are expected to generate healthy growth over the next several quarters."