WASHINGTON -- The latest National Association of Home Builders' (NAHB) Remodeling Market Index (RMI) remained essentially unchanged at 40.8 in the third quarter, compared to 40.7 in the second quarter. An RMI below 50 indicates that more remodelers report that market activity is declining than report that it is increasing; so, on balance, it was the sentiment of remodelers that the market was still declining in the third quarter. The RMI has been running below 50 since the final quarter of 2005.
The overall RMI combines ratings of current remodeling activity with indicators of future activity like calls for bids. In the third quarter, the RMI component measuring current market conditions climbed to 43.4 from 42.6 in the previous quarter. The RMI component measuring future indicators of remodeling business declined marginally, to 38.1 from 38.9 in the last quarter. Again, index numbers below 50 mean that a preponderance of remodelers are reporting declining conditions.
"Consumers remain cautious about spending due to uncertainty in the economy high unemployment, and scarce credit," said NAHB Remodelers Chair Donna Shirey, CGR, CAPS, CGP, a remodeler from Issaquah, Wash. "Homeowners may be looking at remodeling but they are scared to take the leap."
The current conditions indices for the remodeling market remained stable in three regions: Northeast 41.6 (from 41.4 in the second quarter); Midwest 44.9 (from 44.7); and South 42.3 (from 42.4). The West showed more improvement with a jump to 49.3 (up from 42.0). Major additions increased modestly to 45.8 (from 44.2), as did minor additions to 46.4 (from 45.8) and maintenance and repair to 37.1 (from 36.6).
The indices for future remodeling business stayed mostly level. Calls for bids slipped to 42.9 (from 46.2). Work committed for the next three months grew to 30.3 (from 27.9). The backlog of remodeling jobs dipped to 37.2 (from 37.7), and appointments for proposals declined to 41.9 (from 43.7).
"The remodeling market hit the same mid-year stall that the rest of the housing market and the economy hit. Remodeling continues to remain weak as consumers hold off on investing in their home until they feel more confident about the overall economy," said NAHB Chief Economist David Crowe. "The economy is growing, but at a rate well below the level needed to reduce unemployment and ignite consumer confidence. For now, professional remodelers are concentrating on consumers' requests for smaller home improvements until the economic recovery strengthens."