According to the National Association of Home Builders/First American Improving Markets Index (IMI) released July 9, the list of U.S. housing markets showing “measurable and sustained improvement” rose by four to include 84 metros. (See the complete list.)
The modest increase is encouraging to NAHB Chief Economist David Crowe. "[I]t indicates that individual housing markets continue to regain their footing despite some recent reports of weakening in the broader economy," he said. "This is evidence that the housing recovery is slowly but surely taking root, one market at a time."
Housing starts are an element used in computing the LIRA (Leading Indicator of Remodeling Activity). “There’s a strong connection,” between housing starts and remodeling, says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies at Harvard University, which compiles the LIRA. (Watch Baker on a recent Public Television Nightly Business Report discussing this issue.)
“Improving markets indicates that house prices have probably begun to recover. Financing might be more available in those markets. Consumer confidence in the economy and employment growth have begun to improve — [all of these things are] are important for remodeling,” he says.
But the No.1 reason improved housing markets is important is that it indicates turnover, which is directly associated with home improvement activity. “Once you live in your home awhile, you do less and less home improvement,” Baker says. “The big burst usually happens a few months before and a few months after purchase.”
—Stacey Freed, senior editor, REMODELING.