Remodelers' Scale Tips 50; First Time since 2007

The National Association of HomernBuilders’ (NAHB) Remodeling Market Index (RMI) for the third quarter hit 50 forrnthe first time since the same period in 2005 as builders who specialize inrnremodeling report higher levels of activity. rnThe index was at 45 in the second quarter. </p

The RMI is derived from a monthly surveyrnof NAHB professional remodeler members who are asked a series of questions thatrnare assigned numerical indices to calculate two separate indexes and the RMI, arncomposite of the two.   The first indexrngauges current market conditions based on the respondents’ reports about majorrnand minor additions, maintenance work and repairs on both owner occupied andrnrental properties.  The second indexrnmeasures indicators of future activity based on calls for bids, committedrnprojects, job backlogs, and appointments for proposals.</p

The component measuring current marketrnconditions was up 6 points to 52 and the future indicator components rose to 49rnfrom 44.  Any score above 50 indicatesrnthat more remodelers view market conditions as improved than in the previousrnquarter. </p

 “Thernstrength of the RMI, especially in owner-occupied properties, shows that homernowners are investing in remodels as home prices stabilize,” said NAHBrnRemodelers Chairman George “Geep” Moore Jr. “As owners becomernmore confident that investments in housing will hold their value, they arernbeginning to undertake projects to improve their comfort that they had beenrnputting off.”</p

NAHB provided details of builderrnresponses in each category; all improved and many scored large increases. Amongrnthe indicators of current market conditions, maintenance and repair activityrnrose to 56 from 50, minor additions and alterations to 51 from 47, and majorrnadditions and alterations to 49 from 42. rnCurrent remodeling activity was particularly strong in owner-occupiedrnhousing where each of the sub-categories above had scores ranging from 55 torn60.  Scores for current market conditionsrnalso held steady or improved in all four regions of the country. </p

In the sub-categories for future marketrnconditions calls for bids increased 44 to 48; amount of work committed for thernnext three months to 46 from 43, backlogs from 46 to 50 and appointments forrnproposals to 51 from 43.  Future marketrnindicators in the Northeast fell three points to 38 but the other three regionsrneach rose to 50 or above, increasing a minimum of 4 points.</p

“The improvement in the RMIrnprovides more evidence that the remodeling industry is making the orderlyrnrecovery from its low point in 2009 as we’ve been expecting,” said NAHBrnChief Economist David Crowe. “Although remodeling projects over $25,000rnare now showing some signs of strength, they are still lagging behind smallerrnproperty alterations and maintenance and repair jobs. The recovery of thernremodeling market in general, and large projects in particular, continues to bernconstrained by factors such as tight credit and problematic appraisals.”

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