Big-ticket remodeling and replacement activity nationwide rose by a better-than-expected 2% during the third quarter from the previous period, raising the growth streak to seven consecutive quarters, the latest Residential Remodeling Index ( RRI) from Metrostudy showed today.
"2013 is turning out to be the strongest year for remodeling and replacement activity since 2007," Metrostudy--a Hanley Wood company--said in its announcement. It quoted Hanley Wood chief economist Jonathan Smoke as crediting "robust existing home sales, strong home price appreciation, and rebounding consumer confidence" for the growth. He also noted that fewer professional investors are buying homes to rent--a good sign,Smoke said, because owner-occupiers typically spend more on home improvements than do investors looking for renters.
The RRI for the July-through-September period climbed to 93.3 from the upwardly revised second-quarter figure of 91.3. The index uses as a baseline of 100 the economic conditions in spring 2007, the last time the market peaked. Thus, the latest score indicates activity nationwide is 93.3% of what it was then.
Keep in mind, however, that conditions vary dramatically across the nation's 366 metropolitan markets. In Bismarck, N.D., for instance, Metrostudy predicts an activity index of 159 by the third quarter of next year, meaning conditions will be 59% better than in early 2007. Meanwhile, the Midland, Texas, market will be 43.7% ahead of the benchmark. At the other end of the list is Madera-Chowchilla, Calif., with a forecast of just 53.4.
Metrostudy predicts it will take until the fall of 2015 for the national index to top 100. Over that time, it said, the number of projects should increase 9.8% this year from last to total 11.14 million, and by 2015 the number of projects should hit 12.04 million, an 18% rise from 2012.
When one combines forecast activity with market size, Buffalo, N.Y., tops the list. Next come four Texas markets: Houston, San Antonio, Dallas, and Austin.
The RRI is meant to focus on home improvement and replacement projects worth at least $500. It does that via a statistical model that leverages key data points known to influence remodeling activity, such as the number of household-level remodeling projects that get issued.