Remodeling and replacement activity nationwide did better than previously expected in the first quarter and remain on a steady upward path over the next three years, Metrostudy, a Hanley Wood company, projected today in its latest Residential Remodeling Index (RRI).
The first quarter’s index of 86.3 is a 1.1% improvement from the revised score of 85.3 in the final three months of 2012. It also marks the fifth straight quarter of improvement since remodeling activity bottomed out in the summer of 2011 at 82.0.
The index is calibrated against remodeling activity in the first quarter of 2007, so the latest RRI means the nation’s remodelers are doing 86.3% as much business as they were six years previously. The RRI won’t top 100 until the third quarter of 2016, Metrostudy now believes.
In terms of projects and money, Metrostudy now forecasts that activity will increase 1.9% this year to 10.3 million projects while spending on those jobs will climb by the same 1.9% to $140.7 billion.
“Once we received and tallied all of the permits and reported projects in 2012, we found that 2012 ended far stronger than originally estimated in January,” remarked Jonathan Smoke, Hanley Wood’s chief economist. “And with our first read of activity in the first quarter of this year, we are seeing that the remodeling market started the year without skipping a beat. There had been a fear that the economy would fall in the first quarter and pull down home improvement activity, but instead we are seeing remodeling and replacement start the year strong, just as home sales, home prices, and new construction has also started 2013.”
Metrostudy estimates that 331 out of 366 Metropolitan Statistical Areas (MSAs) will show growth in project activity for 2013, with the average growth in activity in these recovering markets of 3%. The current top 10 best markets for remodeling are Buffalo, N.Y.; San Antonio; Houston; Dallas; Austin, Texas; Pittsburgh; Oklahoma City; Denver; Charlotte, N.C.; and Indianapolis.
The RRI covers the 366 MSAs and takes in home improvement and replacement projects worth at least $500. The index is seasonally adjusted. —Craig Webb is editor-in-chief of REMODELING.
About the Residential Remodeling Index
The RRI is a quarterly measure of the level of remodeling activity in 366 metropolitan statistical areas (MSAs) in the U.S., with the national composite reflecting the national level of activity. “Activity” includes home improvement and replacement projects, but does not include maintenance or projects of less than $500. The seasonally adjusted index shows the relative level of activity in the geography specified (MSA or national composite) compared to 2007 (the baseline year). A number above 100 indicates a level of remodeling activity higher than the level of activity at the beginning of 2007, which was the peak of remodeling activity in the prior decade.
The index is produced through a statistical model that leverages detailed data on remodeling activity, including household level remodeling permits and consumer-reported remodeling and replacement projects. Quarterly historical results for the national composite and for each of the 366 MSAs in the U.S. are available back to 2004. In addition, Hanley Wood's Metrostudy also produces annual estimates of project counts and expenditures as well as forecasts of the quarterly RRI and annual projects and expenditures.