Growth in the industry leveled off during the first quarter of 2006, according to the latest Remodeling Activity Indicator (RAI), released in April by the Joint Center for Housing Studies at Harvard University. Homeowners spent an estimated $155.4 billion on remodeling over the past four quarters, an increase of 4.5% from the final quarter of 2005.
This marks the second straight quarter in which quarter-over-quarter growth was just under 5%. While this level of growth is significantly more modest than what occurred during the second half of 2004 and all of 2005, it is not yet cause for alarm.
Nonetheless, it does appear that the once-hot housing industry is cooling off. In the release, Nicolas Retsinas, director of the Joint Center, said that a rise in interest rates, along with a slowing housing market in general, are contributing to a more sluggish remodeling market. “Delays in initiating major improvement projects are likely to moderate spending over the next year,” he added.
Kermit Baker, director of the Remodeling Futures Program at the Joint Center, further cautioned: “Remodeling contractors recently have reported a slight decline in hours worked by their employees, and more modest growth in their payrolls,” he said in the release. “This points to remodeling following home building into a period of slower growth in the months ahead.”
4.8% Annual growth in the gross domestic product in the first quarter of 2006, up from 1.7% in the final quarter of 2005
U.S. Department of Commerce
6.6% Percentage by which sales of 69 retailers rose in April, the best month in more than two years
International Council of Shopping Centers
72% Percentage of the 58,000 consumers surveyed last month who said that rising gas prices would curb their discretionary spending
42% Percentage who said the same about gas prices one year ago
3 Number of times Percy Honniball, a carpenter arrested in Oakland, Calif., in April for working naked, was cited for similar behavior in a six-year period in Berkeley
Source: The Associated Press