The growth rate for remodeling activity nationwide accelerated in the second quarter and should speed even faster in 2016's second half before easing a bit in 2017, according to Metrostudy's latest Residential Remodeling Index (RRI) released today.
The RRI, which taps a suite of economic reports known to influence remodeling activity, rose in the second quarter to a record 104.2. That's 4.9% better than where RRI stood in the April-to-June 2016 period and 1.4% better than it was in 2016's first quarter.
The year-over-year growth rate in the first quarter was 4.3%, that previous report showed. For the second half of this year, Metrostudy forecasts annual growth rates averaging 5% before the increases moderate to 4% in 2017. The national RRI has now risen year over year for 17 consecutive quarters, noted Metrostudy, the data analysis unit that's a sister company to REMODELING.
“The remodeling market continues to benefit from job growth, improvements to wages, and a hot housing market," Mark Boud, Metrostudy's chief economist, said in a statement. "In several housing markets across the country, home prices have now surpassed the peak levels of last decade. Higher prices are bringing more homes to be listed on the market, spurring remodeling before and after a sale, but on the other side, increasing affordability issues are also convincing more people to stay put and invest in upgrading their current residence,
“Most of the remodeling activity currently taking place is for projects that offer greater return on investment, like large-scale renovations meant to upgrade kitchens and bathrooms, or add rooms," he continued. "Smaller projects for deferred maintenance, or maintenance projects that were put on hold in the aftermath of the recession, are also increasing as more people now have means and confidence to catch-up on maintenance. We are expecting steady expansion for the remodeling market over the next few years, as the trend of investing in current homes increases, especially once mortgage rates lift-off from current lows.”
Along with the national report, Metrostudy also produces individual RRIs for America's 381 metropolitan statistical areas. Of those, 363 will see growth this year, Metrostudy predicts.
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 104.2 means we're 4.2% busier now than we were at that prior peak. Learn more at http://www.metrostudy.com/products-services/residential-remodeling-index/.