Significant downturn anticipated in 2009 for home remodeling

CAMBRIDGE, MA – April 16 – Reductions in the amount spent on high-end home improvement projects continue to hinder remodeling activity according to Harvard’s Joint Center for Housing Studies. For 2009, the Leading Indicator of Remodeling Activity (LIRA) points to homeowner improvement spending declining around 12%.

“The weak housing market and the national economic recession continue to take their toll on remodeling,” explains Nicolas P. Retsinas, director of the Joint Center for Housing Studies. “It looks increasing unlikely that this industry will recover until consumers have more confidence in the housing market.”

“Lower financing costs are beginning to stabilize the downturn in existing home sales, as they also are reducing the cost of financing a home improvement project” notes Kermit Baker, director of the Remodeling Futures Program of the Joint Center. “However, they have not been enough to offset rising unemployment and falling consumer confidence and encourage homeowners to undertake major home improvement projects,” cautions Baker.

The complete release is available on the Joint Center for Housing Studies website.

The LIRA projects future trends in homeowner improvement activity, where previously it estimated trends in both owner improvements and maintenance and repairs. A full description of the re-benchmarking of the LIRA can be found in Addendum to Research Note N07-1: Re-Benchmarking the Leading Indicator of Remodeling Activity (N08-1). The LIRA is released quarterly (April, July, October and January) by the Joint Center’s Remodeling Futures Program during the third week after each quarter’s closing. The next release date is July 16, 2009.

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.

The Joint Center’s Policy Advisory Board and other industry sponsors support the Remodeling Futures Program. The development of the LIRA was detailed in a research note entitled: Developing a Leading Indicator for the Remodeling Industry (N07-1).

Harvard’s Joint Center for Housing Studies is the nation’s leading center for information and research on housing in the United States. Established in 1959, the Joint Center is a collaborative unit affiliated with the Graduate School of Design and the Kennedy School of Government. The Director of the Joint Center for Housing Studies is Nicolas P. Retsinas. Read more.