Owner spending on home improvements will continue to trend down through 2009 and into the first part of next year, suggests data released recently by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, in Cambridge, Mass. With annualized declines hovering around 11 percent for the next several quarters, though, some signs suggest the depressed remodeling market is close to a cyclical bottom, the center says.

"Home owners are still hesitant to undertake major remodeling projects. While the pace of decline is moderating, increased remodeling activity will not materialize until further signs of recovery emerge in the broader housing market," says Nicolas P. Retsinas, the center's director.

The trend data was gathered for what the center calls its Leading Indicator of Remodeling Activity (LIRA), which is designed to estimate national home owner spending on improvements for the current quarter and next three quarters. The indicator, measured as an annual rate-of-change of its components, provides a short-term outlook of home owner remodeling activity and is intended to help identify future turning points in the business cycle of the home-improvement industry.

A few components of the LIRA point to renewed strength in the industry, though the overall outlook going into 2010 remains bleak.

"There are some positive developments for the remodeling industry, such as low financing costs for home improvement projects and rising home sales in a growing number of markets," says Kermit Baker, director of the center's Remodeling Futures Program."Weak home prices and decreased cost recovery for most types of remodeling projects, however, discourage owners from pursuing typical upper-end improvements."

The Remodeling Futures Program, initiated by the Joint Center for Housing Studies in 1995, is a comprehensive study of the factors influencing the growth and changing characteristics of housing renovation and repair activity in the U.S. The program seeks to produce a better understanding of the home improvement industry and its relationship to the broader residential construction industry.

The Joint Center for Housing Studies is Harvard University's center for information and research on housing in the U.S. Established in 1959, it analyzes the dynamic relationships between housing markets and economic, demographic, and social trends, and seeks to provide leaders in government, business, and the nonprofit sector with the knowledge needed to develop effective policies and strategies.