NAHB Reports Remodeling Market Strengthened in Third Quarter
Remodeling activity picked up in the third quarter of 2006, according to the National Association of Home Builders' (NAHB) Remodeling Market Index (RMI). The current market conditions index increased from 45.6 to 47.8 on a seasonally-adjusted basis and future expectations moved up by nearly two points to 45.4. The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects.
"Though market strength varies across the country, we are pleased to see a rebound in remodeling activity," said Remodelors council chairperson Vince Butler, CGR, CAPS, GMB, a remodeler from Clifton, Va. "The trillions of dollars in homeowner equity combined with the growing age of the housing stock means that the remodeling market will remain relatively strong in the face of a slower housing market."
Current market conditions in the South and West jumped back into the positive range, up to 51.1 and 51.4, respectively. The future market conditions in both areas increased by more than six points to 50.4 in the South and 56.8 in the West. In the Northeast, current market conditions remained the same at 46.6 while future conditions increased to 47.7. Current conditions in the Midwest grew from 41.3 to 45.4 while future conditions moved from 40.6 to 38.3.
The RMI component for owner-occupied units increased from 49.0 to 51.4 in the third quarter, while the component for renter-occupied units decreased slightly from 39.0 to 38.8 during the same period. In the future expectations index, the component for owner-occupied units moved from 47.2 to 45.0 and the renter-occupied component jumped dramatically from 28.8 to 37.1. Rental-property remodeling accounts for a third of all remodeling expenditures.
"While growth of remodeling activity slowed as new home construction has declined, we still anticipate a strong year in the remodeling market," said NAHB chief economist Dave Seiders. "We currently forecast $233 billion in home remodeling spending for 2006, up from $215 in 2005."
The RMI "special questions" section asked about energy efficiency and "green" remodeling trends. Of remodeling companies surveyed, 25 percent saw an increase in demand for energy features within the last three months, compared with 69 percent who saw no change. Of common energy-saving materials installed within the last three months, the most popular were low-energy windows (86 percent), insulated exterior doors (69 percent), upgraded insulation (65 percent) and ceiling fans (59 percent). Overall, 62 percent of remodeling companies use recycled or recyclable products in remodeled homes.
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