Big-ticket remodeling activity, already enjoying record economic conditions, is growing at its fastest pace in four years and should rise 5.1% this year alone, Metrostudy said today as it released its latest Residential Remodeling Index (RRI).
The RRI as of the first quarter of 2018 stood as 112.9, its highest reading ever. That number means the economic conditions known to influence remodeling activity are 12.9% better than the old peak in early 2007, just before the Great Recession. The RRI has shown year-over-year gains for 24 consecutive quarters, and as of 1Q18 it was 5.2% above the year-earlier level--the highest such annual growth since the first quarter of 2014--and was 1.4% better than it was just three months prior.
The index is based on a statistical model that takes into account such data as household level remodeling permits, employment statistics, and a market's economic health. It then uses that model to predict the number and dollar volume of home improvement and replacement projects worth at least $1,000.
Metrostudy--a sister company to REMODELING--now predicts the number of remodeling projects worth $1,000 and above nationwide will rise 5% this year to 12.55 million, while the value of those projects will climb 6.5% to $194.2 billion. And after the index climbs 5.1% this year, it should go up another 2.7% in 2019, the data operation believes. Actual rates this year will vary among the nation's 381 Metropolitan Statistical Areas, but 370 of them will see growth and the average will be about 4.2%.
“Remodeling activity is being driven by solid gains in employment and rising home values, factors that are giving homeowners the confidence to invest in their homes,” said Mark Boud, chief economist at Metrostudy. “Americans are not only undertaking a greater number of remodeling projects, but larger and more expensive ones. And as a reflection of the long, slow economic expansion that we have been in, many more Americans are just now initiating replacement-type projects that had been deferred during the recovery from the Great Recession. We expect another strong year for the remodeling industry in 2018, and are waiting to see what effect recent tax cuts have on the economy. Early surveys suggest some Americans are increasing their remodeling budgets due to their taxes being lowered.”