flexiblefullpage - default
interstitial1 - interstitial
Currently Reading

Remodeling Market Remains Housing's Bright Spot

Advertisement
billboard -

Remodeling Market Remains Housing's Bright Spot

Recent data from Harvard and NAHB's chief economist shows more work through 2023


By Jerry Konter December 7, 2022
NAHB remodeler study
The RMI survey asks remodelers to rate five components of the remodeling market as “good,” “fair,” or “poor,” with each question measured on a scale from 0 to 100, where an index number above 50 indicates respondents view conditions as good rather than poor. | Graphic courtesy NAHB
This article first appeared in the November/December 2022 issue of Pro Remodeler.

NAHB Chief Economist Dr. Robert Dietz’s presentation to members at the Fall Leadership Meeting in late October contained some starkly negative statistics, such as housing is in a recession. But many remodelers breathed a combined sigh of relief when Dietz added that conditions for their sector, though slowing, should remain positive for the near term.

In fact, Dietz expects a small increase in remodeling activity in 2023, in contrast to new construction, which is expected to decline. High interest rates are having a more negative effect on new construction, and with growing home equity, working from home, and an aging housing stock, remodeling market conditions are expected to remain strong.

 

What Remodeling Data Says

Citing the NAHB/Westlake Royal Remodeling Market Index (RMI) for the third quarter of 2022, Dietz said the overall reading of 77—unchanged from the reading for Q2 and down 9 points from Q1 of 2022—remains relatively strong.

The RMI survey asks remodelers to rate five components of the remodeling market as “good,” “fair,” or “poor,” with each question measured on a scale from 0 to 100, where an index number above 50 indicates respondents view conditions as good rather than poor.


RELATED: Do You Have a Healthy Marketing Mindset?


The RMI is also an average of two major component indices: the Current Conditions Index and the Future Indicators Index. The Current Conditions Index is based on an average of three subcomponents, depending on a project’s size and cost, while the Future Indicators Index is an average of two components; the current rate of leads and inquiries and the current backlog of projects. While both subcomponents were down from Q3 2021, they still remain well above 50, at 82 and 71, respectively.

 

Remodelers Report Relief

Dietz expects the remodeling market to expand during the current housing downturn, as homeowners request more space to work from home, increased energy efficiency amid growing climate concerns, and the trend of aging in place.

“It’s definitely the one bright spot on the horizon,” said Kurt Clason, NAHB Remodelers Chair and owner of Clason Remodeling Co. in Ossipee, NH. “While nearly all sectors are showing a decline with the housing downturn, strong demand for remodeling will allow us to continue with moderate growth.”

“Though labor shortages will still be a challenge, all indications are that many families will choose to stay where they are with their low interest rates and make their home everything they need. And it’s what I love doing,” said Nicole Goolsby, a Remodelers council member and owner of Red Ladder Residential in Raleigh, NC.

The remodeling market is still dealing with the many overarching issues affecting the housing market: the increasing costs and availability of both materials and labor, rising interest rates, and burdensome regulations that contribute to overall affordability concerns.


RELATED: Retrofit Push Benefits Remodelers


The most recent Leading Indicator of Remodeling Activity, released in late October by the Remodeling Futures Program at the Joint Center for Housing Studies at Harvard, projects year-over-year growth in homeowner remodeling and repair spending to shrink nearly 10% from 16.1% in 2022 to 6.5% by Q3 2023.

The market is undoubtedly slowing from the unsustainable growth rates that followed in the wake of the pandemic-induced recession, said Carlos Martín, the project’s director.

Spending for home improvements will continue to face headwinds from declining home sales, rising interest rates, and increasing costs of labor and materials. But remodeling should also see gains from homeowners with record levels of home equity to support renovation financing. And energy-efficiency retrofits incentivized by the Inflation Reduction Act and disaster repairs following recent hurricane activity will support the expansion of the home remodeling market to almost $450 billion in 2023, according to the Harvard report.

All good news for NAHB remodeler members during challenging economic times.

 


written by

Jerry Konter

Jerry Konter, a Savannah, Ga.-based builder with over 40 years of experience in residential construction, is NAHB’s 2022 Chairman of the Board. He is founder and president of Konter Quality Homes, which builds a range of designs in production home communities and is also a custom builder. The company has built more than 2,200 single-family and 700 multifamily homes.


Add new comment

Plain text

  • No HTML tags allowed.
  • Web page addresses and email addresses turn into links automatically.
  • Lines and paragraphs break automatically.

Related Stories

The New American Remodel 2023: Lake House Challenge

The New American Remodel 2023 is the epitome of what a great design-build team can accomplish when faced with tough and unexpected problems

NAHB Releases Remodeler Jobsite Safety Plan Outlines

NAHB recently released a remodelers safety & health program for small remodeling businesses

Reflecting on Remodeling in 2022

Despite a challenging year, remodelers continued strengthening the industry through various efforts

The New American Remodel 2023: Fixing Flaws

A lot of thoughtful problem-solving went into this Florida remodel

Builders' Show to Co-Date with More Industry Events

The industry’s largest show now offers more chances to see new innovations

Pro Remodeler’s Young Professionals Event Coming to IBS

Registration is open for our young professionals event taking place in Vegas at IBS 2023

IBS Remodeled Show Home Goes Virtual

The New American Remodel 2023 will highlight digital capabilities

Strength of Remodeling Market Seen in Growing Balance Sheets

Home values continue to grow with the help of remodeling improvements, says the National Association of Home Builders

Highlighting Opportunities for Women in Construction

The National Association of Home Builders recently testified to Congress for stronger benefits and will celebrate Professional Women in Building Week next month

Lessons from Aging-in-Place Remodeling Pros

Remodelers say knowledge, passion, and trust are key to successful aging-in-place remodeling

Advertisement
boombox1 -
Advertisement
native1 -

More in Category




Advertisement
native2 -
Advertisement
halfpage1 -