Weather Cools Remodeling Perceptions

The Remodeling Market Index (RMI) is to home remodelers as the Housing Market Index (HMI) is to new home builders. Each is constructed by the National Association of Home Builders (NAHB) to reflect builder confidence in their particular share of the market.

The quarterly RMI is based on responses to a survey in which professional remodelers are asked to gauge current market conditions in terms of major and minor additions and alterations, maintenance and repairs on both owner- and renter occupied dwellings. NAHB assigns a numerical value to those answers. They are also asked about calls for bids, work commitments over the next three months, work backlogs, and appointments for proposals. Those questions form the basis of the future indicators index.

The overall market index retreated to its third quarter 2017 reading of 57 in the first quarter of this year, down from 60 in the fourth quarter of 2017.  The RMI has remained above 50, indicating that more professional remodelers view the current market activity as higher compared to the previous quarter than report it lower, since the second quarter of 2013.   

"An RMI reading over 50 shows that consumers still remain engaged in home improvement," said NAHB Remodelers Chair Joanne Theunissen.  "However, higher prices for labor and materials like lumber continue to cause delays in project starts and higher overall project costs."

The current market conditions index lost 2 points compared to the fourth quarter, dropping to 58.  Its major additions and alterations component was down 4 points to 56, minor additions and alterations increased 1 point to 60, and the home maintenance and repair component fell 4 points to 57.

Within the future market indicators index, builders reported that calls for bids were up 1 point to 57, the amount of work committed to over the upcoming three months was down 4 points to 54, the backlog of modeling jobs plummeted 9 points to 57, and appointments for proposals was down 3 points to 43. The overall future market index lost 4 points, dipping to 55.

"Strong price appreciation, inventory shortages of homes for-sale and home owners' desire for updated amenities maintain the remodeling industry on solid footing," said NAHB Chief Economist Robert Dietz. "This quarter's dip may be related to unusually cold weather in many parts of the country, but the forecast is for the remodeling market to grow in 2018."