The National Association of Home Builders (NAHB) Remodeling Market Index (RMI) offers evidence that the U.S. remodeling market is feeling the effects of financial pressures and a sluggish economy, the organization says.
During the second quarter the RMI plunged to 43.9 from the first-quarter reading of 46.5. An RMI below 50 indicates that more remodelers report market activity is lower compared to the prior quarter than those reporting activity is higher.
“Remodelers have experienced the same hiccup that has rippled through the U.S. economy,” said NAHB Remodelers Chairman Bob Peterson, a remodeler from Fort Collins, Colo. “After picking up the pace early in the year, the calls from customers dropped off and remodeling slowed down.”
The overall RMI combines ratings of current remodeling activity with indicators of future activity, such as calls for bids.
The index for market conditions for the second quarter dipped to 44.8 from 46.1 in the first quarter. Future market indications slipped to 43.0 from 46.8 in the previous quarter, the association said.
Regionally, current market conditions eroded in two areas: the Midwest, to 44.4 from 47.1 in the first quarter, and the South, to 42.9 from 46.1. The West, at 48.2 (up from 46.1) and Northeast, at 48.1 (from 46.1) both edged up modestly.
The association also reported that two indicators of current market conditions showed declines: major additions, to 46.2 (from 50.3 in the first quarter) and maintenance and repair, to 38.4 (from 39.5). A third indicator, minor additions, remained “essentially flat” at 48.5 (from 48.0).
Future market indicators also retreated: calls for bids to 49.8 (from 53.1), backlog of remodeling jobs to 45.7 (from 49.7), and appointments for proposals to 44.2 (from 52.4). The amount of work committed for the next three months remained level at 32.3 (32.1).
“While the RMI indicates that the home-remodeling market softened somewhat in the second quarter, this is still the second highest RMI we've been able to report since the third quarter of 2007,” said NAHB Chief Economist David Crowe. “There are several barriers blocking the way to a stronger recovery. Homeowners who may want to remodel still face stringent lending requirements, and uncertainty about the economy is making them hesitant to undertake major improvements.”
More information: www.nahb.org/remodel.