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RAI shows sustained growth.

The remodeling industry enjoyed another outstanding quarter according to the latest edition of the Remodeling Activity Indicator (RAI).

The RAI, published by the Joint Center for Housing Studies at Harvard University, found that homeowners spent just shy of $130 billion on home improvements and repairs between the second quarter of 2004 and the first quarter of 2005. That's an increase of almost $4 billion over the previous four-quarter span, and represents 5.2% growth from the RAI in the first quarter of 2004.

In a press release announcing the data, Nicolas Retsinas, director of the Joint Center, credited the usual suspects for the healthy state of the industry. "Modest economic growth and slowly increasing short-term rates have enabled homeowners to continue a steady pace of home improvements," he said.

Kermit Baker, senior research fellow at the Joint Center and director of its Remodeling Futures Program, which releases the RAI, noted upward trends in the industry's labor force. "Payrolls at remodeling firms have been growing at about 5% per year over the past three years," he said in the press release. "Recently, weekly hours worked per employee have also begun to pick up."

However, Baker indicated that the industry probably will not accelerate, though remodeling activity could remain where it is now. "Labor supply may begin to cap growth rates in the industry," he said in the release.--H.A.

$150
(not adjusted for inflation)

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

2002
1              113.0                           1.7
2              115.2                           5.9
3              117.4                           4.9
4              121.5                          10.8

2003
1              121.7                           7.7
2              121.0                           5.0
3              123.1                           4.8
4              119.9                          -1.3

2004
1              123.5                           1.5
2              127.2                           5.1
3              133.3                           8.3
4              126.1                           5.2

2005
1              129.9                           5.2

Source: Joint Center for Housing Studies

Note: Table made from bar graph.
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Title Annotation:View Point: Market Watch
Author:Alfano, Hayden
Publication:Remodeling
Date:Jun 1, 2005
Words:329
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