Spending nationwide this year on high-end home improvements will shrink about one-eighth from 2008 to total $110.2 billion, Harvard's Joint Center for Housing Studies predicted today.
That update to the center's Leading Indicator of Remodeling Activity (LIRA) is based on a rolling compilation of four-quarter averages; the latest number represents all four quarters of 2009. Compared with the previous LIRA, which was based on actual results and estimates of future performance between October 2008 and September 2009, the latest LIRA falls slightly more--12.3% vs. 12.1%--even though expected expenditures in the period grew slightly, to $110.2 billion from $109.5 billion.
"The weak housing market and the national economic recession continue to take their toll on remodeling," Nicolas P. Retsinas, director of the Joint Center for Housing Studies, said in the center's announcement of the latest LIRA. "It looks increasing unlikely that this industry will recover until consumers have more confidence in the housing market."
LIRA measures spending by homeowners on improvements to their property, such as putting in a new kitchen or bath.It excludes homeowner spending for maintenance and repairs and all spending on rental properties.
Kermit Baker, director of the center's Remodeling Futures Program, noted that lower financing costs are also reducing the cost of financing a home improvement project. "However, they have not been enough to offset rising unemployment and falling consumer confidence and encourage homeowners to undertake major home improvement projects," he said.
While down recently, spending on major homeowner improvements has risen steadily over the past decade, from $75 billion in 1999 to a peak of $144.9 billion in 2006 before falling to $139.1 billion in 2007 and sliding again to $125.7 billion last year.