Remodeler Confidence Highest in almost a Decade

Builders who remodel residential properties are seeing continued activity in their segment of the homebuilding market the National Association of Home Builders (NAHB) said today.  The organization's Remodeling Market Index (RMI) climbed 2 points in the third quarter of 2013 to 57.  It was the highest reading for the RMI since the first quarter of 2004 and the second quarter in a row the index has increased.

A score above 50 for the RMI or any of its components indicate that more builders engaged in remodeling report that activity in various market segments had improved relative to the previous quarter than report declining activity.  Remodelers are also asked to project future activity from current indicators.  Perceptions of current and future activity are averaged for an overall RMI average

The RMI's measure of current market conditions rose four points from the second quarter to 58, the highest in RMI's 12 year history and perceptions of the three major categories of remodeling also increased.  Major additions and alterations grew from 51 to 55, minor additions and repairs from 55 to 58 and maintenance and repair from 57 to 59.   The current market scores, NAHB said, were driven party by rising existing home sales. The future market indicators component of the RMI was unchanged from the previous quarter reading of 56.

"The growth in home equity and home sales prompted home owners to remodel as they prepare to move or undertake upgrades that they put off during tough times," said NAHB Remodelers Chairman Bill Shaw.  "NAHB Remodelers looks forward to continuing our tradition of professional service and craftsmanship as the housing recovery makes progress."

The RMI registered its second consecutive quarterly gains in the Northeast, Midwest and West but edged down slightly in the South after a five point gain the previous quarter. All four regions were above 50 and higher in the third quarter than in the first quarter of 2013.

"In addition to existing home sales, which support remodeling activity as owners fix up their homes before and after a move, remodeling has benefited from rising home values," said NAHB Chief Economist David Crowe. "This boosts home equity that owners can tap to finance remodeling projects. We expect existing home sales and house prices to increase, but at a slower rate over the next year, so the demand for remodeling services should also increase, but more gradually over that period."