The Remodeling Market Index (RMI) reached 55 in the fourth quarter of 2012, increasing five points from the previous quarter, according to the National Association of Home Builders (NAHB). This is the highest reading since the first quarter 2004.
An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.
“Remodelers are optimistic about the outlook for slow and steady market growth in the new year,” said 2013 NAHB Remodelers Chairman Bill Shaw, GMR, GMB, CGP, a remodeler from Houston. "Professional remodelers reported more work from large and small projects as well as overall home repair."
Future market indicators increased from 49 in the previous quarter to 56. Current market conditions also showed improvement, rising from 52 in the previous quarter to 54. Remodelers indicated that activity was particularly strong in owner-occupied properties, rating all categories of remodeling in owner-occupied homes 56 or better.
“With existing home sales up, the increase in the RMI partially reflects the remodeling work new home owners undertake when they move in,” said NAHB Chief Economist David Crowe. “Consumers are gaining confidence in the economy and feeling more comfortable pulling the trigger on large and small renovations.”
The RMI was above 50 in all four regions of the country. The RMI in the Northeast surged 24 points, primarily due to the start of remodeling work related to Superstorm Sandy damage.
NAHB predicts slow improvement for residential remodeling
According to experts at a recent press conference hosted by the National Association of Home Builders (NAHB) Remodelers at the International Builders' Show (IBS) in Las Vegas, residential remodeling will slowly and steadily improve in 2013. Remodelers speaking on the panel agreed with NAHB’s latest economic forecast, citing increased demand from home owners for kitchen and bath renovations and repairs.
NAHB projects that remodeling spending for owner-occupied single-family homes will increase 2.4 percent in 2013 over 2012 with another 1.7 percent in 2014.
“We are more confident about the remodeling market's future coming off a strong year of residential remodeling growth, though the post-recession industry is still restrained by the amount of time it takes to convert leads to sales,” said Bill Shaw. “Our remodeler members are regaining confidence in the market as home owners move forward with projects that they put off in years past.”
“We are predicting slow and steady growth in remodeling activity throughout 2013 and 2014,” said Paul Emrath, NAHB's vice president for survey and housing policy research. “That outlook is consistent with the indicators of future activity in our recent Remodeling Market Index (RMI) survey. Many remodelers are reporting increases in calls for bids and appointments for proposals, so now it's a question of how quickly they can convert those calls and appointments into actual work.”
“Consumers want to create value by adding bonus spaces without building full additions to their home,” said Bob Hanbury, CGR, a remodeler from Newington, Conn. “As part of the economic recovery, professional remodelers are helping clients take advantage of their home’s hidden assets by remodeling basements, above-garage spaces and attics to fully take advantage of the size of the home.”