The latest National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) edged up to 41.5 in the fourth quarter of 2010, compared to 40.8 in the third quarter. An RMI below 50 indicates that more remodelers say market activity is lower compared to the prior quarter than report it is higher. The RMI has been running below 50 since the final quarter of 2005.
The overall RMI combines ratings of current remodeling activity with indicators of future activity like calls for bids. In the fourth quarter, the RMI component measuring current market conditions stayed flat at 43.3 from 43.4 in the previous quarter. The RMI component measuring future indicators of remodeling business increased, to 39.7 from 38.1 in the previous quarter.
“Remodelers are starting to see an uptick in interest from consumers who are considering future remodeling projects,” says NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. “Home owners are also showing more willingness to undertake larger remodeling projects.”
All but one index for future market conditions improved during the fourth quarter. Calls for bids jumped to 47.2 (from 42.9), along with backlog of remodeling jobs at 42.6 (from 37.2), and appointments for proposals at 43.1 (from 41.9). The amount of work committed for the next three months shrank to 25.9 (from 30.3).
“Remodeling activity has been rising slowly since the first quarter of 2010. Expected improvements in the job market and the overall economy are beginning to increase homeowners’ confidence and remodelers are seeing indications that business will pick up,” says NAHB Chief Economist David Crowe. “More remodeling jobs will unfold as consumers in more secure financial positions enter the remodeling market. A more robust recovery in residential remodeling will depend upon future improvements in labor and credit markets.”
Current conditions indices for remodeling improved in two regions: Midwest 54.3 (from 44.9 in the third quarter) and South 45.8 (from 42.3). However, the current indices declined in the Northeast 38.8 (from 41.6) and West 39.7 (from 49.3). Future market indicators grew significantly in nearly all regions: Northeast 49.5 (from 34.0); Midwest 56.1 (from 39.4); and South 47.0 (from 37.9). Only the West region reported some decline at 39.7 (from 41.0). Major additions also expanded to 48.6 (from 45.8), but minor additions dipped slightly to 43.9 (from 46.4), while maintenance and repair stayed flat at 37.0 (from 37.1).