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According to the National Association of Home Builders' Remodeling Market Index, the remodeling market is heading into recovery with an increase to 46.5 in the first quarter of 2011 from 41.5 in the fourth quarter of 2010. This marks the highest level for the RMI since the fourth quarter of 2006. An RMI below 50, however, indicates that still more remodelers report market activity is lower (compared to the prior quarter) than report it is higher.
The overall RMI combines ratings of current remodeling activity with indicators of future activity, such as calls for bids. Current market conditions for the first quarter of 2011 rose to 46.1 from 43.3 in the previous quarter. Future market indicators climbed to 46.8 from 39.7 in the previous quarter.
“Remodelers report a jump in activity so far this year and have been receiving more calls for work and appointments,” said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. “However, many homeowners are still slow to commit to remodeling due to feeling uncertain about the economic recovery and difficulty obtaining loans.”
Regional break downs for current remodeling market conditions showed growth in all but one area: Northeast 46.1 (from 38.8 in the fourth quarter), South 46.1 (from 45.8), and West 46.1 (from 39.7). Only the Midwest experienced a decline to 47.1 (from 54.3).
All current remodeling market indicators increased: major additions to 50.3 (from 48.6 in the fourth quarter), minor additions to 48.0 (from 43.9), and maintenance and repair to 39.5 (from 37.0). Future market indicators also improved across the board: calls for bids rose to 53.1 (from 47.2), appointments for proposals to 52.4 (from 43.1), backlog of remodeling jobs to 49.7 (from 42.6), and amount of work committed for the next three months to 32.1 (from 25.9).
Remodelers also reported the top reasons prospective customers are holding back from remodeling their homes:
- Customers think it is hard to get financing (90 percent of remodeler respondents).
- Customers have lost equity in their homes (81 percent).
- Customers are uncertain about their future economic situation (74 percent).
- Reluctance to invest in home when not sure home will hold its value (67 percent).
- Negative media stories making customers more cautious (62 percent).
- Inaccurate appraisals are making financing more difficult (54 percent).
“Home remodeling continues to slowly increase and continued growth through the year is expected,” said NAHB Chief Economist David Crowe. “The fact that some indicators are breaking 50 means remodelers are seeing improving activity in their markets. While credit scarcity and economic uncertainty continue to weigh down remodeling, signs of increasing consumer interest are promising.”