The consumer spending on home improvement is estimated by the US Commerce Department to have grown by 8.7% in between the year 2011 and 2012. However, the rate has gone down to 3.5% in the first half of 2013. Despite this drop, there is still confidence that the market will do good with the information present suggesting that the remodeling has just slowed down temporarily during the spring and that it will increase in the 2 half of the year 2013 and probably spill into the 1st quarter of 2014. A Joint Center for Housing Studies Report, the Leading Indicator of Remodeling Activity (LIRA), which was released recently, indicates that the momentum in the home remodeling spending is still building.
The report from JCHS shows that there was increased spending in the last quarter of 2012 and the first quarter of 2013. It also predicts that the home remodeling spending by homeowners will increase to a double digit in the last half of this year.
The Leading Indicator of Remodeling Activity from which the US Commerce department is basing its prediction is prepared by scrutinizing the current trends of the market activity indicators. These are such as: building supply stores retail sales, sales for home which are pending and housing starts. The market indicators have for a long time in history had a strong connection to home remodeling spending. During the preparation of the Leading Indicator of Remodeling Activity, these components are weighed so that the relative connection to remodeling spending can be reflected. Historical remodeling trends are then looked at and factors that affect it applied to bring forth a forecast of changes in the market.
The Leading Indicator of Remodeling Activity forecast that there will be increased spending in the 2nd half of this year and the 1st quarter of 2014 has also been supported though partially by the National Association of Realtors report that was recently released. This report showed that the current home sales in the 1st six months of this year throughout the country were at a 10.5 percentage ahead of the total home sales that were recorded in the first six months of the year 2012. According to Eric Belsky who is the Havard’s Joint Center for Housing Studies managing director, the recent homebuyers have been the most vigorous when it comes to the home remodeling market. The increased sale of existing homes is thus providing these homebuyers with increased opportunities for home remodeling projects which will in turn lead to increased remodeling spending.
The LIRA report predicts thy by the last three months of 2012, the rate of spending in the home remodeling projects will be accelerating at 19.8% especially with the activity of the dollar value estimated to hit an annual total of 150.9 billion US dollars. The Joint Centre for Housing Studies estimates that in the year 2014, the growth rate for the remodeling sector will only decrease slightly in the first quarter and the annual gain will still be very okay at a rate of 17.2%.