A general strengthening in the housing market over the past 18 months has led to increased spending on home improvements, according to a metric developed by the Joint Center for Housing Studies of Harvard University.
The center has devised what it calls the Leading Indicator of Remodeling Activity, or LIRA, as a way to estimate national homeowner spending on improvements for the current quarter and subsequent three quarters. According to the center, the indicator provides a short-term outlook of homeowner remodeling activity.
“Homeowners are more comfortable investing in their homes right now,” Eric S. Belsky, the center’s managing director, said in a statement. “Consumer confidence scores are back to pre-recession levels, and since recent homebuyers are traditionally the most active in the home improvement market, the growth in sales of existing homes is providing more opportunities for these improvement projects.”
In a separate statement, Kermit Baker, the center’s director of the Remodeling Futures Program, added some words of caution.
“With housing starts leveling off in the second quarter and financing costs beginning to edge up, we may be seeing the beginning of more measured growth in the residential markets,” Baker said. “Given normal timing patterns, this suggests that the pace of growth for home improvement spending should begin to moderate as we move into 2014.”