Seasonal Remodeling Decline Arrives Early; More Severe

Residential remodeling eased off in August, dropping by 13 percent from the July seasonally adjusted annual rate of 3.434 million to 2.987 million.  The rate is also 5 percent below the 3.140 estimate for remodeling in August 2012 according to the BuildFax Remodeling Index (BFRI) released on Monday

BFRI is based on construction permits for residential remodeling projects filed with local building departments and estimates the number of properties rather than projects permitted.  The BuildFax database currently covers over 60 percent of the U.S. commercial and residential building stock with over 6 billion data points.

"The end-of-summer drop this year was both earlier and more severe than last year," said Joe Emison, Chief Technology Officer at BuildFax, "but overall residential remodeling activity in 2013 still remains higher than it was in 2012."

If the BuildFax estimates are accurate they do indeed indicate an earlier slowdown in the booming remodeling market than had been predicted by LIRA (Leading Indicator of Remodeling Activity) earlier this month.  That index from the Harvard Joint Center for Housing Studies uses a quarterly moving average for remodeling expenses and had projected an increase from the second to third quarter of 10.4 percent and from the third to the fourth of 15.9 percent.  LIBA had seen a downturn finally occurring in the second quarter of 2014.

Seasonally-adjusted annual rates of remodeling across the country in August 2013 are estimated as follows: Northeast, 616,000 (down 10% from July and down 35% from August 2012); South, 1,241,000 (down 8% from July and down 8% from August 2012); Midwest, 668,000 (down 38% from July and up 8% from August 2012); West, 760,000 (down 3% from July and flat from August 2012).