An improving housing market and record low interest rates are driving projections of strong gains in home improvement activity through the end of the year and into the first half of 2013, according to our latest Leading Indicator of Remodeling Activity (LIRA).  The LIRA suggests that the seeds for what appears to be a very robust remodeling recovery have been planted, with annual homeowner improvement spending expected to reach double-digit growth in the first half of 2013.

 After a bump in home improvement activity during the mild winter, there was a bit of a pause this summer.  However, the LIRA is projecting an acceleration in market activity beginning this quarter, and strengthening as we move into the new year.  Strong growth in sales of existing homes and housing starts, coupled with historically low financing costs, have typically been associated with an upturn in home remodeling activity some months later.  While the housing market has faced some unique challenges in recent years, this combination is expected to produce a favorable outlook for home improvement spending over the coming months.  (Click chart to enlarge.)

For more information about the LIRA, including how it is calculated, visit the Joint Center website.