Home Improvement Spending Likely To Slow

Cambridge, MA, July 17, 2009--Homeowners will continue to decrease spending on home improvements for several more quarters, though the pace of declines in remodeling activity is moderating, according to the latest research form Harvard University's Joint Center for Housing Studies.

The center's leading indicator of remodeling activity suggests a 12.3% drop in 2009 spending on home improvement, unchanged from the April outlook and a slight improvement over the 13.6% drop in 2008.

Annual declines should hover around 11% for the next several quarters despite some signs the depressed remodeling market is close to a cyclical bottom, the center said in a news release.

Director Nicolas P. Retsinas said low financing costs for home-improvement projects and rising home sales in a growing number of markets are positive developments for the remodeling industry.

"It would begin to give you a sense that maybe things are - to use the phrase of the day - not as bad as they have been," he said.

Still, most other components of the indicator remain negative. Increased remodeling activity won't materialize until further signs of recovery emerge from the broader housing market, he said.

For example, weak home prices and decreased recovery of costs tied to most remodeling projects continue to discourage owners from pursuing typical upper- end improvements, said Kermit Baker, director of the center's remodeling futures program.

On Thursday, the center said 2008 homeowner improvements totaled $120.1 million, or 13.6% below 2007, compared with April's estimate of a 9.7% drop.

The center's indicator measures and projects spending by homeowners on property improvements. Excluded from the projection are spending on maintenance and repairs and spending on rental or vacation property.