The decline in remodeling activity may be reaching an end, according to the latest National Association of Home Builders' (NAHB) Remodeling Market Index (RMI). Current market conditions jumped to 47.0 from 36.4 in the fourth quarter of 2009. Future indicators of remodeling business leapt to 48.9 from 31.4 in the last quarter. A new unified measure incorporating both current and future conditions, called the RMI Index, rose to 47.9 from 33.9 in the previous quarter.
The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number below 50 indicates that more remodelers say market conditions are getting worse than report improving conditions. The RMI has been running below 50 since the final quarter of 2005, but the first quarter 2010 is the best showing since the first quarter of 2006.
"Remodelers are receiving more calls for work, but getting signed contracts is still challenging" said NAHB Remodelers Chairman Donna Shirey, CGR, CAPS, CGP, a remodeler from Issaquah, Wash. "We're working a little more, but not making more due to tighter margins, onerous federal regulations, and consumer anxiety about making large purchases."
Current conditions for the remodeling market improved in three regions: Northeast 45.8 (from 27.7 in fourth quarter 2009); Midwest 47.0 (from 37.5); and South 49.0 (from 40.0). However, remodeling conditions declined in the West to 36.6 (from 41.7). Major additions climbed to 53.8 (from 40.0), as did minor additions to 49.6 (from 40.7). Maintenance and repair grew to 36.6 (from 27.1).
Summary indices for future market indicators swelled substantially with calls for bids jumping to 56.3 (from 37.5 in fourth quarter 2009)) and appointments for proposals soaring to 59.2 (from 34.4). The amount of work committed for the next three months expanded modestly to 33.0 (from 21.9). Backlog of remodeling jobs also strengthened to 47.2 (from 31.9).
"Although the overall RMI and most of its components are still slightly below the break-even point of 50, the recent improvements suggest that the remodeling market may soon reach its bottom and begin to grow in the coming months," said NAHB Chief Economist David Crowe. "However, professional remodelers are still operating in a highly competitive marketplace and dealing with consumers who are uncertain about the future."