Home Remodeling Expected to Decline Into '08

Spending for home improvement is projected to be 2.3% lower this year than in 2006, which would be the first decline since 2003, according to Harvard's Joint Center for Housing Studies.The Leading Indicator for Remodeling Activity, an updated version of an indicator maintained by the JCHS since 1998, suggests that the slowdown ("well into 2008") is a direct reaction to the current weakness in house prices and consumer confidence, which have taken a toll on home improvement expenditures. "The recent problems in credit markets are expected to dramatically reduce the level of cash-out mortgage refinancing activity," said Kermit Baker, director of the JCHS Remodeling Futures Program. "Given that equity withdrawals have been a key source of funding for home improvements, market spending is expected to suffer."