The final Remodeling Market Index (RMI) of 2005 showed a slowdown in the fourth quarter. The year as a whole was positive— though somewhat below the level of 2004.

According to a press release from the National Association of Home Builders (NAHB), which publishes the RMI, the current market conditions portion of the index dropped from 50.9 to 46.6 nationally. And the future expectations index —which measures remodelers' opinions of the upcoming quarter — slid to 47.5. Anything over 50 is considered a positive sign.

The reasons given for the decreases should be familiar by now. “The rise in interest rates has slowed homeowner refinancing, [which is] often used to fund remodeling projects,” Vince Butler, chairman of NAHB's Remodelors Council, said in the release. NAHB chief economist David Seiders said: “The market could not sustain the record pace of home sales recorded in 2005.”

However, despite the discouraging level of the future expectations index, Seiders isn't too worried about the remodeling industry in the near future. “We feel that 2006 will be a solid year in the housing sector with ongoing growth in the remodeling industry,” he continued.

This latest survey also questioned remodelers on the most significant problems facing their businesses. Nearly 80% anticipate high materials costs being their biggest hurdle in 2006.

Source: Joint Center for Housing Studies

Source: Joint Center for Housing Studies