Baths Edge Kitchens for Most Common Remodeling Project in 2013

May 1, 2014

May is National Home Remodeling Month. We lead off a series of posts in recognition of the occasion with results from NAHB’s quarterly Remodeling Market Index (RMI) survey showing that bathrooms remained the most common type of job performed by NAHB Remodelers in 2013.

Among remodelers responding to the 4th Quarter 2013 RMI survey, bathroom remodeling was cited as a common job during the year by 72 percent, followed closely by kitchen remodeling at 70 percent. Since the inception of the survey in 2001, bathrooms and kitchens have been jockeying for top spot on the most popular remodeling projects list. At first kitchen remodeling led the race by a few percentage points, but after 2009 bathroom remodeling edged into first place where it has remained through 2013.Remodeling Jobs in 2013Although other categories of remodeling trail kitchens and baths by a substantial margin, window and door replacements, whole house remodeling, and room additions are also relatively popular projects, cited as common jobs in 2013 by 35 to 40 percent of remodelers each. Repairing damage, handyman services and decks were cited as common by 25 to 29 percent.

In general, there have been few large changes in the percentages over the last two iterations of the common remodeling projects questions, but whole house remodeling has rebounded from a low point during the depths of the housing downturn.Whole House HistoryAfter spending most of the decade of the 2000s well above 40 percent, the share of remodelers citing whole house remodeling as a common project plummeted to 21 percent in the second quarter of 2010, before bouncing back up to 35 percent in the first quarter of 2012 and 39 percent in the latest survey. Although not back to its pre-2010 peak, the rising share of NAHB members reporting that a big ticket item like whole house remodeling has become common for them is a sign that the market has made some progress toward a recovery.


Weather Constrains Remodeling Market Index in the First Quarter

April 24, 2014

Against the backdrop of unusually severe winter weather, NAHB’s Remodeling Market Index (RMI) declined to 53 in the first quarter of 2014, from the historically high level of 57 in the two previous quarters. However, the RMI remains above the key break-even point of 50.  An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower.RMI 14Q1 chartThe overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.  In the first quarter of 2014, the index for current market conditions declined three points to 53.  The subindex for the current maintenance and repair component increased two points to 59, a historically high reading.

The index of indicators for future remodeling activity fell from 58 in the previous quarter to 52, but all four components remained at or above 50. Calls for bids was 52, the amount of work committed for the next three months was 50, the backlog of remodeling jobs was 55, and appointments for proposals was 52.

RMI 14Q1 table

Currently, factors like labor shortages and credit availability are constraining growth in residential remodeling and other segments of the housing industry. In the first months of 2014, activity was also affected by an uncommonly harsh winter. The two components of the RMI that declined the most in the first quarter, calls for bids and appointments for proposals, are the ones most likely to respond to weather conditions.

For more detail and a complete history of the RMI and its components, see NAHB’s RMI web page


NAHB’s Remodeling Market Index Rebounds in the Second Quarter

July 26, 2013

NAHB’s overall Remodeling Market Index (RMI) rebounded in the second quarter of 2013, bouncing back up to the post-2004 peak of 55 it reached at the end of 2012.  An RMI above 50 indicates that more remodelers report market activity is higher than lower, compared to the previous quarter.  After a long stretch below that break-even point, the RMI has been near or above 50 for four straight quarters.

RMI Q2 2013A

The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.  In the second quarter, the current market conditions component increased from 50 to 54, while future market indicators increased from 48 to 56.   All of the sub-components of future activity (calls for bids, work committed for three months, backlog, and appointments) were over 50 for the first time in eight years.

RMI Q2 2013B

Some of the factors underlying remodelers’ positive outlook are rising home prices, which increase home owners’ equity and make it easier for them to finance remodeling projects, and additional momentum from existing home sales.   Previous research published by NAHB has shown that buyers of existing homes spend about $2,000 more than usual on remodeling soon after moving in.


Remodelers’ Confidence Dips in the First Quarter

April 30, 2013

Conditions in the remodeling market dipped in the first quarter, according to NAHB’s survey of professional remodelers, as the overall Remodeling Market Index (RMI) derived from the survey fell six points to 49.   Prior to that, the RMI had been generally trending upward, albeit with significant quarter-to-quarter fluctuations.  So, although the first quarter 2013 RMI indicates a pause in the improvement that the remodeling market had been showing, it is nevertheless the third highest reading for the RMI since the first quarter of 2006.

RMI Q1 2013

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.

In the first quarter of 2013, both major components of the RMI declined. The future market indicators component decreased from 56 in the previous quarter to 48. Current market conditions fell from 54 in the previous quarter to 50.

Concern about the rising costs of construction materials and labor probably contributed to the pause in the general upward trend of remodelers’ confidence, as the rising cost of doing business makes it difficult to deliver at prices many customers expect.

For more detail on all RMI components and subcomponents, along with their history, see NAHB’s RMI web page.


Remodelers’ Confidence Reaches Highest Point Since 2005

October 25, 2012

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.

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.

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


Remodeling Market Index Adjusts Downward in Second Quarter

July 27, 2012

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


Traditional Reasons for Remodeling are Still the Main Market Drivers

May 21, 2012

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 at http://www.nahb.org/fileUpload_details.aspx?contentID=180910