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RAI indicates growth slowdown.

Growth in the industry leveled off during the first quarter of 2006, according to the latest Remodeling Activity Indicator (RAI), released in April by the Joint Center for Housing Studies at Harvard University. Homeowners spent an estimated $155.4 billion on remodeling over the past four quarters, an increase of 4.5% from the final quarter of 2005.

This marks the second straight quarter in which quarter-over-quarter growth was just under 5%. While this level of growth is significantly more modest than what occurred during the second half of 2004 and all of 2005, it is not yet cause for alarm.

Nonetheless, it does appear that the once-hot housing industry is cooling off. In the release, Nicolas Retsinas, director of the Joint Center, said that a rise in interest rates, along with a slowing housing market in general, are contributing to a more sluggish remodeling market. "Delays in initiating major improvement projects are likely to moderate spending over the next year," he added.

Kermit Baker, director of the Remodeling Futures Program at the Joint Center, further cautioned: "Remodeling contractors recently have reported a slight decline in hours worked by their employees, and more modest growth in their payrolls," he said in the release. "This points to remodeling following home building into a period of slower growth in the months ahead."--H.A.

             4-QUARTER TOTAL             ANNUAL RATE OF
             IN BILLIONS OF $            MOVING TOTALS

  Q1             121.7                         7.7
  Q2             121.0                         5.0
  Q3             123.1                         4.8
  Q4             119.9                        -1.3

  Q1             123.5                         1.5
  Q2             127.2                         5.1
  Q3             133.3                         8.3
  Q4             143.4                        19.6

  Q1             148.7                        20.4
  Q2             150.8                        18.6
  Q3             158.0                        18.5
  Q4             149.9                         4.5

  Q1             155.4                         4.5

Source: Joint Center for Housing Studies

Note: Table made from bar graph.
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Title Annotation:ViewPoint: MarketWatch
Author:Alfano, Hayden
Date:Jun 1, 2006
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