Remodeling gains forecast to continue

CAMBRIDGE -- National home-remodeling gains, which perked up this year after several years of sluggishness, are expected to continue into 2014, according to a report from the Joint Center for Housing Studies at Harvard University.

Specifically, a gradually improving housing market over the past 18 months is translating into increased spending on home improvements, according to the so-called Leading Indicator of Remodeling Activity (LIRA) released last week by the Remodeling Futures Program at the Joint Center.

The report found that remodeling contractors have been reporting improving market conditions for the past four quarters, and are seeing strength in future market indicators.

The report found that during the first quarter of 2013, $127 billion was spent nationwide on home improvements. That's up about 2.5 percent from $121.5 billion in the first quarter of 2012.

However, spending in the last quarter of this year is expected to jump to about $150.9 billion, nearly 20 percent higher than it is now, according to the Joint Center.

"Homeowners are more comfortable investing in their homes right now," said Eric Belsky, managing director of the Joint Center, in a prepared statement. "Consumer-confidence scores are back to pre-recession levels, and since recent homebuyers are traditionally the most active in the home-improvement market, the growth in sales of existing homes is providing more opportunities for these improvement projects."

The report found that the Leading Indicator of Remodeling Activity (LIRA) is projecting continued strengthening of the market through the end of this year and into the first quarter of 2014.

One of Belsky's colleagues, Kermit Baker, issued a note of caution.

"With housing starts leveling off in the second quarter and financing costs beginning to edge up, we may be seeing the beginning of more measured growth in the residential markets," said Baker, director of the Remodeling Futures Program at the Joint Center. "Given normal timing patterns, this suggests that the pace of growth for home-improvement spending should begin to moderate as we move into 2014."

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Remodeling gains forecast to continue