A variety of economic factors point to big-ticket remodeling activity nationwide rising 4.4% this year, 3.1% in 2018, and 2.7% in 2019, according to Metrostudy's latest Residential Remodeling Index (RRI) released today.
The index, formulated from several economic factors known to influence the undertaking of home improvement and replacement projects worth at least $1,000, stands at an all-time high of 106.1 as of 2016's fourth quarter, reported Metrostudy, a sister company to Remodeling. That means conditions are 6.1% better than they were in the benchmark first quarter of 2006, when remodeling work peaked just prior to the Great Recession.
The index has now seen 19 consecutive quarters of year-over-year gains since 2011, the bottom of remodeling activity nationwide. And locally, for the first time since RRI began, all 381 Metropolitan Statistical Areas are expected to see year-over-year growth in remodeling and replacement projects in 2017.
“The remodeling industry in the United States will continue to be fueled by an economy approaching full employment, growing paychecks, and continued gains in home equity over the next few years,” said Mark Boud, Metrostudy's chief economist. “Mortgage rates are forecast to increase through 2017 and beyond. We will be watching closely to see what happens in the remodeling market, when mortgage rates surpass the 5% mark. Higher rates will slow home sales and price appreciation, but the net positive for the remodeling industry will be a large number of households staying in the homes they locked-in at the 4%-or-below range, and choosing to renovate there.
"The outlook is positive for home remodeling, but the industry should keep a close eye on current challenges pertaining to a shortage of construction workers," Boud continued. "The shortage, if exacerbated, could further increase job costs and diminish project potential.”
Here's the number of projects and spending, in millions of dollars, that the RRI indicates we should expect in coming years:
|Year||No. of Projects||Expenditure ($mlns)|