A pickup in home sales, low financing costs, and improved consumer confidence is expected to push annual growth in spending on remodeling projects into the double digits by early 2013, according to a quarterly report released Thursday by Harvard’s Joint Center for Housing Studies. The Leading Indicator of Remodeling Activity
tracks the short-term outlook for homeowner remodeling activity, finding in its latest iteration that most markets nationwide have stabilized to the point that homeowners, whose home improvement spending is already on the upswing, will continue to feel comfortable investing in their homes.
The anticipated 12.2% rate of increase to $128.9 billion by Q1 2013 doubles the expected 5.9% growth-rate expected in Q4 2012 at $120.7 billion and represents the linear growth that followed a dip in Q1 2012. That drop resulted in a less-than-1% rate of growth in the second quarter to total $113.6 in spending. The indicator’s forecasts for Q4 2012 and Q1 2013 top Census Bureau home-improvement spending figures for more than two years. (See graphic)
“Warm weather in the first quarter temporarily bumped up remodeling activity in many areas,” says Eric Belsky, managing director of the Joint Center. “By the end of the year, however, positive market fundamentals are expected to kick in, moving the industry out of this ebb and flow period and into a new growth phase.”