In another indicator of an improving economy, US homeowners are expected to dole out more money for home improvements through the third quarter of this year, according to a report released Thursday by Harvard University.
Homeowners are likely to increase spending on remodeling projects by double digits during each of the first three quarters of 2013, said Harvard’s Joint Center for Housing Studies.
Eric Belsky, managing director of the center, said spending on housing accounted for one out of every six dollars of the country’s gross domestic product during the first nine months of 2012, and he expects the numbers to increase this year.
“It’s encouraging to see the residential sector finally contribute to growth in our economy,’’ Belsky said.
Kermit Baker, director of the center’s Remodeling Futures Program, said home renovations pumped $275 billion into the economy in 2011. This year is off to a solid start, he said, because of the improved housing market and continued low interest rates. But Baker cautioned there is always a risk the growth could be derailed because of external factors, such as gridlock in Washington, D.C., over the federal budget.
Barry Rutenberg, chairman of the National Association of Home Builders, said builders have been increasingly optimistic about local housing markets over the past few months. According to the Commerce Department, construction of single- and multi-family homes in December was at the highest level since June of 2008.
“With inventories of new homes at razor-thin levels, builders are moving prudently to break ground on new construction ahead of the spring buying season to meet increasing demand,’’ Rutenberg said.
Also on Thursday, CoreLogic, a California-based provider of data and business analysis, reported the number of homeowners nationwide whose homes are worth less than their mortgage balance dropped in the third quarter of 2012. About 10.7 million borrowers, or 22 percent of homes with mortgages, were considered “underwater,” CoreLogic said.
In the Boston area, where the housing market generally suffered less than in the rest of the country during the housing downturn, about 14.7 percent of homeowners with mortgages were underwater in the third quarter last year.
Anand Nallathambi, president CoreLogic, said these numbers, too, are likely to improve this year.
“We expect to continue to see more borrowers escape the negative equity trap, which will be a strong positive for the housing market specifically and the broader economy generally,” he said.