Good news, remodelers: After 10 consecutive quarters of often-precipitous decline, remodeling activity is projected to bottom out and begin increasing in the second quarter of this year, according to the latest Leading Indicator of Remodeling Activity (LIRA), produced by the Joint Center for Housing Studies of Harvard University.

But don’t break out the Champagne just yet. Even by the end of this year, remodeling spending will still be in the dumps compared to the go-go years of 2005-2007.

The fourth-quarter 2009 LIRA, released this morning, projects remodeling activity to hit its low-water mark in this quarter of 2010, at $103.9 billion, then climb steadily through the rest of the year, to $110.9 billion in the third quarter. That compares to a spending peak of $146.2 billion in the second quarter of 2007.

“It appears we may be near the bottom of the current remodeling cycle,” said Nicholas P. Retsinas, director of the Joint Center, in a press release. “With signs of stabilization in the national economy, homeowners are once again planning home improvement projects.”

Remodeling fundamentals are turning positive, the press release continues. “Sales of existing homes are on the rise, and home price declines are moderating in most markets across the country,” said Kermit Baker, director of the Center’s Remodeling Futures Program. “Financing costs are also favorable, although credit availability remains tight for many households.

Baker is at the International Builders Show this week and unavailable for comment, but the Center's Abbe Will says the latest LIRA indicates that the long freeze on remodeling spending is “starting to improve in the near future.” However, “it definitely will not be a quick recovery” to anything approaching the spending highs of 2007, she cautions.

Conducted quarterly, the LIRA is comprised of eight data points that impact home improvement spending. These include shipments of building materials (Census Bureau), the Pending Home Sales Index (National Association of Realtors), the Remodeling Market Index (future business expectations, National Association of Home Builders), and the 30-year Treasury Bond yield (Federal Reserve Board).

“Until now, the LIRA has been bumping along the bottom,” Will says. The projected uptick “has been a long time coming.”

Click here to read the Harvard press release.

Click here for previous REMODELING coverage of LIRA reports.

Click here to read more about the LIRA’s benchmarking methodologies