Report Shows Slight Drop in Remodeling Market Sentiment
The National Association of Home Builders released its first quarter NAHB/Westlake Royal Remodeling Market Index, which posted a reading of 62. That’s down two points from the previous quarter but is still solidly in positive territory.
The NAHB/Westlake Royal RMI survey asks remodelers to rate five components of the remodeling market as “good,” “fair” or “poor.” Each question is measured on a scale from 0 to 100, where an index number above 50 indicates that a higher share view conditions as good than poor. The results of the RMI are seasonally adjusted.
“Remodeler sentiment remained generally positive in the first quarter, as it was at the end of last year, even as many remodelers are still working to manage their customers’ cost expectations,” said NAHB Remodelers Chair Elliott Pike, a remodeler from Homewood, Ala. “Only a relatively small share report homeowners putting projects on hold due to economic and political uncertainty.”
Current Conditions Index
The Current Conditions Index averaged 70, edging down one point compared to the previous quarter. All three components remained well above 50 in positive territory: the component measuring large remodeling projects ($50,000 or more) dipped two points to 67, the component measuring moderate remodeling projects (at least $20,000 but less than $50,000) dropped two points to 69, and the component measuring small-sized remodeling projects (under $20,000) increased one point to 74.
The Current Conditions Index is an average of three components: the current market for large remodeling projects, moderately-sized projects and small projects.
“Ongoing positive remodeler sentiment is consistent with the NAHB outlook, given an aging housing stock and the lock-in effect of elevated mortgage rates keeping owners in their homes,” said NAHB Chief Economist Robert Dietz. “In the first quarter, remodelers reported that 21% of their projects were associated with home improvements made shortly after a purchase, while only 4% were for homeowners’ projects to ready a home for sale.”
Future Indicators Index
The Future Indicators Index averaged 54, down two points compared to the previous quarter. The component measuring the current rate at which leads and inquiries are coming in dipped one point to 53, and the component measuring the backlog of remodeling jobs dropped three points to 55.
The Future Indicators Index is an average of two components: the current rate at which leads and inquiries are coming in and the current backlog of remodeling projects.
The overall RMI is calculated by averaging the Current Conditions Index and the Future Indicators Index. Any number over 50 indicates that more remodelers view remodeling market conditions as good than poor.