Though 2012 will start off slow, the year could end on a positive note for remodeling activity, 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. If housing industry momentum continues to build from June to December, the year could end with homeowner improvement spending at $113.6 billion.
"There are positive signs from LIRA, and more positive signs coming from the residential market, and a few glimmers coming from the broader economy," says Kermit Baker, director of the Remodeling Futures Program at the Joint Center. He says that sales of existing homes have been increasing in recent months, offering more opportunities for home improvement projects, and with lending institutions becoming less fearful of the real estate sector, financing will become more readily available to owners looking to remodel.
Data from other industry sources shows some glimmers of good news for the housing market. Mortgage applications increased 23.1% from one week earlier, according to the Mortgage Bankers Association’s (MBA) weekly survey for the week ending Jan. 13, 2012. “With mortgage rates reaching new lows, refinance volume jumped and MBA’s refinance index reached its highest level in the last six months. Purchase activity also increased as buyers returned to the market after the holiday season,” said Michael Fratantoni, MBA’s vice president of research and economics, in a press release.
The National Association of Home Builders/First American Improving Markets Index (IMI) released earlier this month says that the number of housing markets showing measurable improvement nearly doubled in January with the addition of 40 new metros to the index. The IMI now has 76 improving markets, up from 41 in December. The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment, and house prices for at least six consecutive months. New markets include Denver, Jacksonville, Fla., Bridgeport, Conn., Indianapolis, Lansing, Mich., and Nashville, Tenn.
Baker says that the economy is still vulnerable to another downturn, especially with the instability in Europe and the repercussions of oil prices reach $150 per barrel. He says that the end of the next quarter will provide a better outlook for the housing market for the rest of 2012. The next LIRA release date is April 19, 2012. —Nina Patel, senior editor, REMODELING.