By Mary Ellen Lloyd
Of DOW JONES NEWSWIRES
Spending on home remodeling is showing signs of stabilizing, and a strengthening economy could see growth by the second quarter of next year, according to the latest research from Harvard University's Joint Center for Housing Studies.
The center's leading indicator of remodeling activity suggests spending on home improvement will drop 12.6% to $105 billion this year, slightly worse than the July outlook. Still, that would be an improvement over the 13.6% drop in 2008.
Spending is expected to remain fairly flat from the fourth to first quarters, but by the second quarter spending on home-improvement projects could run at an annualized rate of $107.6 billion, the center said.
"Favorable financing costs - for those households with access to credit - and a pickup in homes sales are producing more opportunities for home improvement projects," said Kermit Baker, director of the center's Remodeling Futures Program, in a release.
But other factors still impede remodeling growth.
"A generally weak housing market with unstable prices, near record levels of foreclosures, and other distressed sales are discouraging households from undertaking nonessential remodeling projects," Baker said.
The center's indicator measures and forecasts spending by homeowners on property improvements. Excluded from the projection are spending on maintenance and repairs and spending on rental or vacation property.
The Census Bureau on Wednesday said sales at building supply and garden-equipment retailers, which include Home Depot Inc. (HD) and Lowe's Cos. (LOW), fell 13.7% from a year earlier in the third quarter, worse than the second quarter's 12% decrease.
Shares of Dow component Home Depot fell 0.2% to $27.23 in recent trading, while Lowe's dipped 0.7% to $21.57.
-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145; maryellen.lloyd@dowjones.com