Home improvement spending will remain tepid through the first half of 2012, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.
“There’s a lot of volatility in the market with a bit of random, non-seasonal bouncing around,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center, adding that the “bouncing around” is due to replacement projects that are typically weather-related, and those numbers are getting mixed into the data. “It’s weak enough that the noise sort of dominates from what the trend is. Our indicators tell us that the trend is flat when we were hoping there would be a more clear sense of a recovery.”
As for how long this lackluster market will continue, Baker says to count on a fairly bleak outlook at least until the middle of 2012. “After that it’s a little too early to tell,” he says. “We’re not seeing anything that would indicate a dramatic turnaround. Quite frankly, it depends on what the economy does over that period.” Key indicators will not only include consumer confidence but also any periods of sustained job growth or a more stable housing market.
For remodeling to see a significant uptick, it’s really going to take a sharp increase in consumer confidence in the economy and housing market. “If you live in a market where prices are trailing down, it’s a more difficult decision to pull the trigger on that upscale remodeling investment,” Baker says. “You’re going to do the roofing and siding stuff that you need to do but the discretionary stuff is a harder sell in this market. It’s going to take some sense that things are getting better. And there’s enough uncertainty that people don’t feel that way at present.”