Remodeling activity nationwide strengthened during the first quarter to its most robust pace in two years and looks likely to do even better for all 2016, based on Metrostudy's Residential Remodeling Index (RRI) released today.
The national RRI climbed to 102.7 in the first quarter. That's a 4.3% increase from 2015's first-quarter index, 1.1% better than the final quarter of 2016, and the biggest year-over-year gain for any quarter since the opening three months of 2014, reported Metrostudy, which is a unit of Hanley Wood and a sister company to REMODELING. Metrostudy now predicts year-over-year quarterly growth will average 4.4% in 2016 and 3.8% in 2017.
Looking more locally, 371 of the nation's 381 metropolitan statistical areas will see their RRI numbers increase this year, with annual growth averaging 4.2%, Metrostudy said.
The RRI is formulated from several economic factors known to influence the undertaking of home improvement and replacement projects worth at least $1,000. Its baseline of 100 matches activity levels in the spring of 2007, which was the peak for remodeling activity a decade ago. The current score of 102.7 means we're 2.7% busier now than we were at that prior peak.
“The housing market was one of the few bright spots among first quarter economic reports, and continued increases in sales and home values are propelling home renovations,” said Mark Boud, Metrostudy's chief economist. “As for jobs, the labor market flexed its muscles in March, but April’s report fell short of expectations. However, April saw the third-best monthly gain in wages during the past year.”
Homeowners who have low mortgage rates locked-in will prefer to improve their current home rather than move and buy another home at a higher mortgage rate, Boud predicted.
For more on the RRI, click here.