Remodeling Market Sentiment Remains in Positive Territory in Second Quarter

The National Association of Home Builders (NAHB) released the NAHB Remodeling Market Index (RMI) for the second quarter, posting a reading of 61. Although the reading inched down one point from the previous quarter, it is still in positive territory and has remained in the low 60s consistently over the past year.

The RMI survey asks remodelers to rate five components of the remodeling market as "good," "fair" or "poor." Each question is measured on a scale from 0 to 100, where an index number above 50 indicates that a higher share view conditions as good than poor. The results of the RMI are seasonally adjusted.

The Current Conditions Index is an average of three components: the current market for large remodeling projects, moderately-sized projects and small projects. The Future Indicators Index is an average of two components: the current rate at which leads and inquiries are coming in and the current backlog of remodeling projects. The overall RMI is calculated by averaging the Current Conditions Index and the Future Indicators Index. Any number over 50 indicates that more remodelers view remodeling market conditions as good than poor.

"Remodeler sentiment has been positive and stable over the past year," said NAHB Remodelers Chair Elliott Pike, a remodeler from Homewood, Ala. "The major headwinds that are preventing an even stronger remodeling market include rising costs, political and economic uncertainty, and difficulty obtaining financing with favorable interest rates for larger projects."

"Despite affordability concerns, rising home owner equity and an aging housing stock are powering demand for residential remodeling," said NAHB Chief Economist Robert Dietz. "This is keeping the remodeling market relatively strong despite certain impediments, like the rising cost of building materials. In the latest RMI survey, 74% of remodelers reported that their suppliers have increased prices of materials since March due to higher fuel costs, with the average increase in materials prices over that time being 6.7%."

The Current Conditions Index averaged 70, remaining unchanged from the previous quarter. All three components remained well above 50 in positive territory: the component measuring large remodeling projects ($50,000 or more) dipped three points to 64, the component measuring moderate remodeling projects (at least $20,000 but less than $50,000) increased four points to 73, and the component measuring small-sized remodeling projects (under $20,000) held steady at 74.

The Future Indicators Index averaged 52, down two points compared to the previous quarter. The component measuring the current rate at which leads and inquiries are coming in dropped two points to 51, and the component measuring the backlog of remodeling jobs dipped one point to 54.

For the full RMI tables, please visit nahb.org/rmi.