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Home-Remodeling Spending Seen On Track For 1Q Bottom-Study
Homeowner spending on remodeling is likely reaching a cyclical bottom in the current quarter, according to the latest research from Harvard University's Joint Center for Housing Studies. The center's leading indicator of remodeling activity also suggests U.S. spending on home improvement should steadily increase through 2010 to end three years of declines. Remodeling activity is important to sales and earnings for Home Depot Inc. (HD), the world's largest home-improvement retailer, and smaller rival Lowe's Cos. (LOW). Spending on remodeling fell 8.7% to $109.7 billion in 2009, slightly better than the October outlook and an improvement from the 14% drop in 2008, the center said Thursday. But first-quarter spending is expected to weaken further, tracking at an annualized rate of $103.9 billion before improving enough by the third quarter to track at an annualized rate of $110.9 billion. "It appears we may be near the bottom of the current remodeling cycle," said Nicolas P. Retsinas, director of the Joint Center for Housing Studies. "With signs of stabilization in the national economy, homeowners are once again planning home-improvement projects." The center cited rising sales of existing homes, moderating home-price declines in most markets and favorable financing costs despite still-tight credit availability for many households. 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 properties. Its view Thursday is in line with other projections. Consulting firm IHS Global Insight and a trade group, the Home Improvement Research Institute, in August projected 2009 home-improvement product sales would post their biggest decrease in 32 years before turning positive in 2010. Lowe's and Home Depot executives have also said it is likely to be mid-2010 before same-store sales improve. Shares of Home Depot, a component of the Dow Jones Industrial Average, recently were down 0.1% to $28.62 in premarket trading, while Lowe's, which ended regular trading Wednesday at $22.80, had not traded premarket. http://money.cnn.com/news/newsfeeds/articles |
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