The weakness in house prices and consumer confidence has taken a toll on home improvement expenditures, with declines expected to extend well into 2008 according to the leading indicator developed by Harvard’s Joint Center for Housing Studies. The Leading Indicator for Remodeling Activity (LIRA), which builds on the Remodeling Activity Indicator that the Joint Center has been releasing since 1998, notes homeowner spending for home improvement activity will likely decline for the first time since late 2003. Overall homeowner remodeling spending for 2007 is projected to be 2.3 percent lower than 2006.
“As homeowners become increasingly concerned about falling house prices and a slowing economy, home improvement spending is dragging,” explains Nicolas P. Retsinas, director of the Joint Center for Housing Studies. “Coupled with very modest home sales, spending levels are likely to fall.”
“The recent problems in credit markets are expected to dramatically reduce the level of cash-out mortgage refinancing activity,” comments Kermit Baker, director of the Remodeling Futures Program of the Joint Center. “Given that equity withdrawals have been a key source of funding for home improvements, market spending is expected to suffer.”
The LIRA is a new initiative from the Remodeling Futures Program to estimate future national remodeling activity with a horizon of three quarters. The LIRA replaces the Remodeling Activity Indicator (RAI) previously released by the Joint Center. 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.
Holding on Despite Disruption
The market for existing-home sales is “holding on” in the face of mortgage disruptions, although current resales are about 9 percent below the level that was posted at the same time in 2006, the National Association of Realtors said last month. “Home sales probably would be rising in the absence of (current) mortgage liquidity issues,” said Lawrence Yun, NAR senior economist. Yun added that the recent rise in sales and prices in the Northeast “is promising because this was the first region that underwent sales and price weakness after the boom. Now, it appears it will be the first region to climb back, indicating that other regions could follow a similar path.”
Remodeling Activity Reported Steady in Face of Decline
U.S. remodeling activity slowed slightly in the second quarter of this year, although activity has remained relatively steady, even in the face of the ongoing housing slump, the National Association of Home Builders said last month.
According to the latest in a quarterly series of Remodeling Market Indexes issued by the Washington, D.C.-based NAHB, current sentiment among professional remodelers reflects mixed messages.
“While we’ve experienced some weakening in the remodeling market, activity has remained relatively steady,” commented Mike Nagel, NAHB Remodelers chairman. “We may have seen a decline in the number of major remodeling projects; however, the market has been buoyed by an increase in the number of homeowners requesting smaller-scale projects and home alterations.”
According to David Seiders, NAHB chief economist, the remodeling market “is following the downswing we’re seeing in the overall housing market. Seiders said the NAHB expects further erosion for remodeling through the second half of 2007 and into 2008, followed by a gradual recovery in 2009 and beyond.
NARI Launches New Online Career Center
The National Association of the Remodeling Industry, NARI, announced the launch of its interactive job board, the Remodelers’ Career Center. With its focus on remodeling industry companies and professionals, the Remodelers’ Career Center offers NARI members — and the remodeling industry at large — an easy-to-use and highly targeted resource for online employment connections.
“We’re very excited about the Remodelers’ Career Center because we know how critical it is for employers in the remodeling industry to attract first-rate talent with a minimum expenditure of time and resources,” said Michele Heaphy, member services coordinator for NARI. “It’s also important for us help enable smooth career transitions for those seeking industry jobs.”
Both members and nonmembers can use Remodelers’ Career Center to reach qualified candidates. Employers can post jobs online, search for qualified candidates based on specific job criteria, and create an online résumé agent to e-mail qualified candidates daily. They also benefit from online reporting that provides job activity statistics.
For job seekers, Remodelers’ Career Center is a free service that provides access to employers and jobs in the remodeling industry. In addition to posting their résumés, job seekers can browse and view available jobs based on their criteria and save those jobs for later review if they choose. Job seekers can also create a search agent to provide e-mail notifications of jobs that match their criteria.