Remdeling Market Remained Sluggish In Second Quarter

Posted by RealEstateRama

August 12, 2008

August 12, 2008 - (RealEstateRama) — Residential Remodeling activity remained sluggish during the second quarter of 2008, according to the National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI). The current market conditions indicator rested at 41.8, the same level as the first quarter, while the future expectations measure rose slightly to 38 from 37.9 in the previous quarter.

The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number over 50 indicates that the majority of remodelers view market conditions as improving. The RMI has been running below 50 since the final quarter of 2005, implying shrinkage of remodeling expenditures since that time.

“Remodelers are experiencing slower activity in markets nationwide, particularly for major improvements to owner-occupied housing” said NAHB Remodelers Chairman Lonny Rutherford, CGR, CAPS, CGP, a remodeler from Farmington, N. M. “While markets remain pretty active, most remodelers are taking on a greater number of smaller jobs to maintain their businesses.”

The index shows a gradual decline in overall remodeling activity since 2005. Nationally, major additions and alterations declined slightly to 43.18 (from 44.15) during the second quarter, while minor additions and alterations increased slightly to 42.89 (from 41.57). Maintenance and repair declined to 39.06 (from 39.68)

“As in previous economic downturns, remodeling activity is proving to be cyclical rather than countercyclical, although the degree of decline pales in comparison to the setbacks registered in the new-home market, said NAHB Chief Economist David Seiders. “We expect remodeling to remain generally flat in 2009 followed by strong growth due to home maintenance needs.”

Regionally, current market expectations dropped in the second quarter, with the Northeast falling to 32.8 (from 36.4), the South to 40.1 (from 42.2), and the West to 42.4 (from 42.9). The Midwest, however, increased to 52.9 (from 44.1). All measures for future expectation (calls for bids, amount of work committed for next three months and appointments for proposals) slumped slightly except for a small increase in backlog of remodeling jobs at 42.13 (from 41).

Eighty-four percent of surveyed remodelers also reported home builders diversifying into remodeling due to the downturn in home building, thus contributing to more saturated remodeling market conditions.

For more information about remodeling, visit www.nahb.org/remodel.

ABOUT THE RMI: The RMI is based on a quarterly survey of professional remodelers, whose answers to a series of questions were assigned numerical values to calculate two separate indexes. The first index gauges current market conditions and is based on remodelers’ reports of major and minor additions and alterations, plus maintenance work and repairs, on both owner- and renter-occupied dwellings. The second index gauges expectations for the near future and is based on remodelers’ reports of their calls for bids, amount of work committed for the next three months, job backlogs and appointments for proposals. A variety of “special questions” are also asked at the end of the survey to help pinpoint market trends.

ABOUT NAHB REMODELERS: NAHB Remodelers is America’s home for professional remodelers, representing the 14,000 remodeling industry members of the National Association of Home Builders (NAHB). Founded in 1982, the organization provides information, education and designation programs to improve the business and construction expertise of its members and to enhance the professional image of the industry. Its membership incorporates 139 local councils in 42 states. Learn more about remodeling at www.nahb.org/remodel.

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