Reposted from the Boston Business Journal by Thomas Grillo, Real Estate Editor
Improved home sales and record low interest rates are driving projections of strong gains for home improvement through 2012 and into the first half of next year, according to the Leading Indicator of Remodeling Activity released Thursday by the Joint Center for Housing Studies of Harvard University.
The survey said 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.
“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,” said Kermit Baker, director of the Remodeling Futures Program at the Joint Center, in a statement. “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.”
Harvard’s study comes as the nation’s largest home improvement stores reported mixed results last quarter. Home Depot (NYSE: HD) reported its per-share profit was $1.01 in the second quarter. That was considerably stronger than the year ago number of 86 cents and topped forecasts of 97 cents. Total revenue was up 1.7 percent, while same-store revenue was up 2.1 percent.
Lowe’s (NYSE: LOW) posted per-share income of 68 cents last quarter, flat from last year and 2 cents shy of expectations for 70 cents this time around. Total revenue fell 2 percent in the wake of the company’s decision to closing 27 stores.