Remodeling Expenditures Mirror Housing Stats

Remodeling activity is expected to decline through the first quarter 2009, according to Harvard’s Joint Center for Housing Studies. This report replaces the discontinued Commerce Department report on remodeling and alterations.

Several weeks ago, Landscape Communications reported that the Commerce Department would no longer be issuing reports on expenditures for residential improvements and repairs. That story can be found on landscapearchitect.com, www.landscapearchitect.com/research/article/10894.

The Commerce Department announced that the fourth quarter 2007 data would be the last report was released, due to a lack of funding. Fortunately for industry officials who want this information, Harvard University has stepped up to the plate to compile this data.

Harvard’s Joint Center for Housing Studies is taking the reins on this data and they will also be compiling this information on a quarterly basis. Harvard’s data is called the “Leading Indicator of Remodeling Activity” (LIRA); unfortunately, the latest LIRA report estimates that homeowner improvement activity will continue to decline, falling by an annual rate of 11.1 percent by the first quarter of 2009.

“The slumping economy and struggling housing sector continues to drag down spending on home improvements,” Nicolas P. Retsinas, director of the Joint Center for Housing Studies, said. “Households are reluctant to undertake major improvements in the context of falling prices.”

The Center notes that weak home sales and a growing inventory of unsold homes have discouraged upper-end remodeling activity in many areas. Improvements are projected to total $139.2 billion in the second quarter, $134.1 billion for the third quarter, and $126.3 billion in the fourth quarter. First quarter 2009 estimates show expenditures at $122 billion, down from the first quarter 2008 total of $137.2 billion.

The LIRA measures and projects only a portion of the U.S. home improvement market, namely spending by homeowners on property improvements. Other components of the broader market — spending by homeowners on maintenance and repairs, and spending on improvements, and maintenance and repairs for rental and vacation property — are not included in the LIRA figures.

Source: Harvard Joint Center for Housing Studies