Leading Indicator of Remodeling Activity (LIRA)

According to the Leading Indicator of Remodeling Activity was released on April 15, 2010 by Joint Center for Housing Studies of Harvard University. For the first time since 2006, remodeling spending is on the rise. The annual growth is 4.9%

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What is Leading Indicator of Remodeling Activity (LIRA)?

The LIRA was created to provide the home improvement industry with a timely and accurate estimation of changes in spending activity by homeowners, as well as an estimate of near-term activity, with a horizon of three quarters. On a quarterly basis, the LIRA tracks the annual volume of homeowner expenditures in home improvements and repairs from the C-50 series using the four-quarter moving averages of several indicators that are associated with homeowner maintenance and improvement activity. The annual rates-of-change for the input components of the LIRA are lagged differentially, meaning that they have a different timing relationship with home improvement spending. This relationship was determined by evaluating which lag produced the best correlation with annual rate-of-change of homeowner remodeling expenditures. The input variables were then weighted according to their correlation with the C-50 series and their volatility. Finally, the components were integrated into one four-quarter rate of change that constituted the LIRA.

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