The Leading Indicator of Remodeling Activity (LIRA) shows that remodeling will continue on the upswing, says Kermit Baker, director of the Remodeling Futures Program at Harvard’s Joint Center for Housing Studies.
The LIRA, prepared quarterly by the Remodeling Futures Program, estimates national homeowner spending on improvements in the current quarter and three subsequent quarters. LIRA findings are based on eight major indicators that strongly correlate to remodeling spending – including shipments of building materials (Census), the Pending Home Sales Index (National Association of Realtors), the Remodeling Market Index (future business expectations, the National Association of Home Builders), and the 30-year Treasury Bond yields (Federal Reserve Board)..
“It looks like spending will pick up on an annual basis at the end of this year and will accelerate as we move through 2011,” Baker says.
However, recent low interest rates on mortgages and other financial products haven’t translated into the level of growth normally seen with such low rates.
“This was a serious downturn,” Baker says. “Households are not convinced we’re in a full-blown recovery. But all the major elements are moving in the right direction.”