Category Archives: Remodeling Market Index

Fourth Quarter 2012 Highest RMI since Q1 2004

Fourth Quarter 2012 Highest RMI since Q1 2004

Remodeling Market Index shows reason for optimism

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, owner of Wililam Shaw & Associates in  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. Remodeling staff

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Remodelers’ Confidence Reaches Highest Point Since 2005

Remodelers’ Confidence Reaches Highest Point Since 2005

by Paul Emrath — Eye on Housing

NAHB’s Remodeling Market Index (RMI) climbed to 50 in the third quarter of 2012, up from 45 in the previous quarter.  At 50, the RMI is at its highest point since the third quarter of 2005, tracking the positive trends recently seen in the rest of the housing sector.

RMI Q3 12 a

The RMI measures professional remodelers’confidence in the market based on a quarterly survey that asks if various aspects of remodeling activity have gotten better or worse since the previous quarter.

The responses are aggregated into two major component indices.  In the third quarter of 2012, the major RMI component on current market conditions rose from 46 to 52, while the future indicators component increased from 44 to 49.  Each of the major RMI components is now higher than it has been at any time over the past six years.

Current remodeling activity was particularly strong in owner-occupied housing during the third quarter.  The sub-components of the current conditions index for owner-occupied housing were all well over 50, ranging between 55 and 60.

RMI Q3 12 b

Although additions and alterations over $25,000 also showed considerable strength in the third quarter, they continue to lag behind smaller property alterations and maintenance and repair jobs.  The recovery of the remodeling market in general, and large projects in particular, is still facing constraints such as tight credit and problematic appraisals.

For more detail on all RMI components and subcomponents, along with their history, see NAHB’s RMI web page:http://www.nahb.org/reference_list.aspx?sectionID=136

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Remodeling Market Index Adjusts Downward in Second Quarter

Remodeling Market Index Adjusts Downward in Second Quarter

by Paul Emrath — Eye on Housing

NAHB’s Remodeling Market Index (RMI) slipped under pressure from a softening labor market, dropping two points to 45 in the second quarter of 2012. The downward adjustment comes after the RMI reached 48 twice in 2011, the highest reading since 2006.

The RMI is based on a quarterly survey of NAHB remodelers that asks them to rate current remodeling activity along with indicators of future activity, like calls for bids. An RMI below 50 indicates that more remodelers report market activity is lower (compared to the prior quarter) than report it is higher.

In the second quarter, the RMI component measuring current market conditions dropped to 46 from 49 in the previous quarter.

Current conditions for maintenance and repair and minor additions and alterations remained relatively strong in the second quarter.  The weakest part of the market continues to be major additions and alterations (jobs valued at $25,000 or more).  Larger projects are especially likely to be constrained by continuing tight credit conditions and inaccurate appraisals that make customer financing difficult.

Meanwhile, the RMI component measuring future indicators of remodeling business remained unchanged at 44, as declines in calls for bids (from 47 to 44) and appointments for proposals (from 45 to 42) were offset by increases in the backlog of jobs (from 43 to 46) and amount of work committed for the next three months (from 42 to 43).

For more detail on all RMI components and subcomponents, along with their history, see NAHB’s RMI web page:http://www.nahb.org/reference_list.aspx?sectionID=136

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Traditional Reasons for Remodeling are Still the Main Market Drivers

Traditional Reasons for Remodeling are Still the Main Market Drivers

by Paul Emrath — Eye on Housing

According to the remodelers who answered special questions on NAHB’s Remodeling Market Index (RMI) survey for the 1st quarter of 2012, the traditional “need to repair/replace old components” and “desire for better/newer amenities” are still why most customers choose to remodel their homes.  On a scale of 1 to 5 (where 1 indicates never or almost never, and 5 is very often), these were the only reasons to remodel that scored an average of above 4.0.

In contrast, some of the trendier reasons to remodel—like energy efficiency or aging in place—scored below 3.0.  Getting a property ready for a distressed sale scored a particularly low 1.35.

The survey also asked remodelers if particular reasons to remodel had increased or decreased in frequency over the past two years.  The most common reasons to remodel tended to be on the rise, and the least common on the decline.  For instance, “need to repair/replace old components” and “desire for better/newer amenities” appear at the top of the second chart as well, as the only reasons to remodel that over half remodelers said were increasing in frequency (either somewhat or significantly).  Similarly, preparing for a sale (distressed or otherwise) appears at the bottom of both charts.

On balance, most reasons to remodel seem to be on the rise, at least slightly.  Other than preparing for a sale, the only exception is remodeling to increase the value of the home as an investment.  Twenty-five percent of remodelers said that increasing the value of the home was becoming a less common motivation among their customers, compared to 19 percent who said it was becoming more common.

The relatively low incidence of remodeling to increase the home’s investment value or prepare it for  sale—along with the high rate of remodeling in heavily used areas like bathrooms (as reported in the May 8 blog)—reinforces the notion that owners are interested in enhancing the spaces in their homes more for themselves than for future owners.

The survey results described above are available in more detail (including a breakdown of each question by Census region) online athttp://www.nahb.org/fileUpload_details.aspx?contentID=180910

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Remodeling Market Index Little Changed in First Quarter

Remodeling Market Index Little Changed in First Quarter

by Paul Emrath — Eye on Housing

After increasing in the 4th quarter of 2011, NAHB’s Remodeling Market Index (RMI) declined by one point to 47 in the 1st quarter of 2012.

Both of the RMI’s major components declined in the 1st quarter.  The RMI component measuring current market conditions dropped one point to 49, while the component indicating future remodeling activity fell two points to 44.

The RMI and all of its components are based on a survey of remodelers that asks them if various market conditions have gotten better or worse since the previous quarter.  The answers are placed on a scale from 0 to 100, where 50 is a “break-even” point that occurs when equal numbers of remodelers report better and worse conditions.

Recently, even more than the overall RMI, its current-conditions component has been fairly stable, moving in a relatively narrow band just below the break-even point of 50.

For more detail on the RMI, all its components and subcomponents, and a complete history, see NAHB’s RMI web page:http://www.nahb.org/reference_list.aspx?sectionID=136

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Residential Remodeling Index increases 3% in February

Residential Remodeling Index increases 3% in February

by CalculatedRisk on 4/16/2012  

From BuildFax:

Residential remodels authorized by building permits in the United States in February were at a seasonally-adjusted annual rate of 2,894,000. This is 3 percent above the revised January rate of 2,811,000 and is 23 percent above the February 2011 estimate of 2,362,000.

“February 2012 is the first month over the past twelve to show significant increases in residential remodeling activity across all U.S. regions,” said Joe Emison, Vice President ofResearch and Development at BuildFax.

The BuildFax Remodeling Index (BFRI) is based on construction permits for residential remodeling projects filed with local building departments across the country. The index estimates the number of properties permitted. The national and regional indexes are based upon a subset of representative building departments in the U.S. and population estimates from the U.S. Census. The BFRI is seasonally-adjusted using the X12 procedure.

Residential Remodeling IndexClick on graph for larger image.

This graph shows the Remodeling Index since January 2000 on a seasonally adjusted basis.

Remodeling is below the peak levels of the housing boom – with all the equity extraction – but up 25% from the bottom in May 2009.

Note: Permits are not adjusted by value, so this doesn’t mean there is more money being spent, just more permit activity. Also some smaller remodeling projects are done without permits and the index will miss that activity.

Residential Remodeling IndexThe second graph shows the regional indexes. From BuildFax:

Seasonally-adjusted annual rates of remodeling across the country in February 2012 are estimated as follows: Northeast, 627,000 (up 24% from January and up 33% from February 2011); South, 1,194,000 (up 3% from January and up 25% from February 2011); Midwest, 516,000 (up 4% from January and up 22% from February 2011); West, 830,000 (up 9% from January and up 21% from February 2011).

Some of the increase in February could be weather related (the index is seasonally adjusted, and the weather in February was warmer than normal). This might especially be true in the Northeast.

For overall residential investment, multi-family construction and home improvement have already picked up, and it appears single family construction will increase in 2012.

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Residential Remodeling Index increases 11% year-over-year in January

Residential Remodeling Index increases 11% year-over-year in January

by CalculatedRisk on 3/19/2012 

From BuildFax:

Residential remodels authorized by building permits in the United States in January were at a seasonally-adjusted annual rate of 2,998,000. This is 13 percent above the revised December rate of 2,653,000 and is 11 percent above the January 2011 estimate of 2,705,000.

Residential remodeling this winter is as strong as it has been in more than five years. We expect residential remodeling to continue to grow throughout 2012,” said Joe Emison, Vice President of Research and Development at BuildFax.

The BuildFax Remodeling Index (BFRI) is based on construction permits for residential remodeling projects filed with local building departments across the country. The index estimates the number of properties permitted. The national and regional indexes are based upon a subset of representative building departments in the U.S. and population estimates from the U.S. Census.

Residential Remodeling IndexClick on graph for larger image.

This graph shows the Remodeling Index since January 2000 on a seasonally adjusted basis. Earlier release were not seasonally adjusted.

Remodeling is below the peak levels of the housing boom – with all the equity extraction – but up 29% from the bottom in May 2009.

Note: Permits are not adjusted by value, so this doesn’t mean there is more money being spent, just more permit activity. Also some smaller remodeling projects are done without permits and the index will miss that activity.

For residential investment, multi-family construction and home improvement have already picked up, and it appears single family construction will increase in 2012.

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