A host of economic conditions point to a speedup in the growth rate for big-ticket remodeling projects the rest of this year following a winter that only slightly damped demand, Hanley Wood's chief economist says.
Jonathan Smoke's prediction accompanied the May 8 release of Metrostudy's release of its Residential Remodeling Index (RRI) for the first quarter. The RRI came in at 95.2, just a tenth of a point behind its forecast but seven-tenths of a point better than the revised fourth quarter's 94.5. Year over year, the index has gained 6.6%, and Metrostudy (a division of Hanley Wood) says America's 381 Metropolitan Statistical Areas should see average growth of 5% this year.
“We are hearing from remodelers and contractors all across the country that the weather did impact their ability to execute from job site issues to labor and material delays," Smoke said in a statement. "With the winter now behind us and our forecast remaining strong for 2014, we expect to see the pace of growth improve throughout the year. Remodelers remain quite confident about their business based on our April survey of remodelers and replacement contractors. On a national basis, the quality and volume of their job backlog is high and the corresponding quality and volume of leads and inquiries is even higher.”
The RRI is drawn from a mathematical formula that takes into account a variety of economic factors that reflect whether there's a change in the number of big-ticket remodeling projects--work costing at least $1,000. The formula's result is indexed to where it stood at the start of 2007, when the economic conditions for remodeling were at their most favorable that decade. Thus, the current score of 95.2 means conditions are 95.2% as good as they were in 2007's first quarter.