17 October 2013 17:10 [Source: ICIS news]
Correction: In the ICIS story headlined “US home remodelling activity should rise well into 2014” dated 17 October 2013, please read in the sixth paragraph … “an annualised rate of $111.4bn (€82.4bn)” … instead of … “an annualised rate of $11.4bn (€8.44bn)”. A corrected story follows:
HOUSTON (ICIS)--Home remodelling activity is expected to continue to grow at double-digit rates well into 2014, but will likely to slow its intensity by the middle of next year, according to a report released on Thursday.
Remodelling and other home improvement activity has risen steadily in the past three years, and it is expected to increase even more before the projected slowing, according to the Joint Center for Housing Studies (JCHS) of Harvard University, which issued the report.
“In the near term, homeowner spending on improvements is expected to see its strongest growth since the height of the housing boom,” said Kermit Baker, director of the Remodelling Futures Program at the Joint Center. “Existing home sales are still growing at a double-digit pace, and rising house prices are helping homeowners rebuild equity lost during the housing crash.”
A softening in home building coupled with rising financing costs is expected to contribute to the slowing, but remodelling and other home improvements should continue at healthy levels even after the activity begins to taper, the study’s authors said.
That is good news for the chemical makers whose solvents, resins and plastics find end use in paints, carpeting, wallboard, laminate panels, polyvinyl chloride (PVC) pipe used in home construction and remodelling.
Home improvement projects bottomed out in the first quarter of 2011 at an annualised rate of $111.4bn (€82.4bn). But they have steadily recovered ever since, up to an estimated rate of $127.4bn during the third quarter of 2013, according to data from the US Census Bureau.
Harvard’s JCHS Leading Indicator of Remodelling Activity forecasts that remodelling spending will hit an annualised rate of about $148.9bn by the middle of 2014 before sliding back slightly as pent-up demand is more nearly satisfied and rising borrowing costs raise the entry fee to financing.
The JCHS points to continued double-digit increases in existing-home sales as the prime driver for the remodelling activity as sellers spruce up their offerings and new homeowners remodel their purchases to reflect their own styles and tastes.
Construction activity has been a prime driver of demand for paints, resins and plasticizer sales as building products makers churn out plywood, paints, coatings, synthetic carpet fibres and other construction materials.
($1 = €0.74)
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