The August release of the Remodeling Market Index (RMI) showed a downturn in market demand in the second quarter of 2006. This result — measured by polling remodeling professionals about their perceptions of the industry — is in line with the slowdown in remodeling reported in the Joint Center for Housing Studies Remodeling Activity Indicator.

The current conditions portion of the RMI dropped to 45.6 from 48.1 (anything above 50 is considered to be a positive sign). Perhaps even more of a concern, however, is that the index for confidence for the upcoming quarter dropped more than five points, to 43.5.

Dave Seiders, chief economist for the National Association of Home Builders, which publishes the RMI, reiterates that some downturn is expected, given the high levels of activity the industry has seen over the last few years.

He also notes that, relative to the new-home industry, remodeling will continue to fare well. “Remodeling tends to move in the same direction [as new homes],” he says, “but not to the same degree.” Seiders cites existing home sales — behind which the remodeling industry lags for two to three years — which were strong through the end of 2005, as one reason why.