Harvard JCHS: Remodeling Recovery Picking Up Steam

Thursday, January 17, 2013, 9:44am

A new report from Harvard's Joint Center for Housing Studies says that a rebound in home remodeling activity, an important component of economic growth, is picking up a steam across the country and the sector is set to expand in 2013.

The center's Leading Indicator of Remodeling Activity (LIRA) shows robust spending in the second half of 2012, suggests the remodeling recovery is already underway. Spending on remodeling was up 8.2 percent in Q4 2012, rising to $124.1 billion, compared to $115.1 billion at the same time last year.

Its encouraging to see the residential sector finally contribute to growth in our economy, Eric S. Belsky, managing director of the center, said in a statement. Through the first three quarters of 2012, investment in the residential sector was responsible for one out of every six dollars added to our GDP. Moving forward, home improvement spending is expected to make an even larger contribution to GDP growth.

The LIRA projects annual homeowner improvement spending will see accelerating double-digit growth through the third quarter of 2013. The center estimated that spending will rise more than 19 percent in Q3 2013, to over $145 billion.

There are many external economic and political risks that could derail this remodeling recovery, Kermit Baker, director of the Remodeling Futures Program at the center, said in a statement. However, the solid momentum behind home building activity, existing home sales, low financing costs, and remodeling contractor sentiment all point to a solid start to the new year for home improvement spending.

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Harvard JCHS: Remodeling Recovery Picking Up Steam