Homebuilders Report Steep Uptick in Remodeling Demand

by devteam May 3rd, 2010 | Share

Declaringrnthat the decline in remodeling activity may be reaching an end, the NationalrnAssociation of Homebuilders (NAHB) released the results of its RemodelingrnMarket Index (RMI) for the first quarter of 2010. 

The three part index measures remodelers'rnperceptions of market demand for current and future residential remodelingrnprojects.  Any result below 50 indicatesrnthat more respondents feel that the market is getting worse than indicate it isrnimproving.   

The datarnis collected and reported to include impressions of both the current andrnimpending market and NAHB has created a new unified index combining the twornperceptions.  The first segment of thernindex measuring current market conditions jumped to 47.0 from 36.4 in thernfourth quarter of 2009.  The index ofrnremodeler perceptions of future conditions had an even greater improvement,rnsoaring to 48.9 from 31.4.  The unifiedrnmeasure was up from 33.9 in the previous quarter to 47.9

The RMIrnhas been consistently below 50 since the fourth quarter of 2005 and dipped intornthe low 20s in the fourth quarter of 2008. rnThis is the best showing for the index since Quarter 1 of 2006.

“Although the overall RMIrnand most of its components are still slightly below the break-even point of 50,rnthe recent improvements suggest that the remodeling market may soon reach itsrnbottom and begin to grow in the coming months,” said NAHB Chief Economist DavidrnCrowe. “However, professional remodelers are still operating in a highlyrncompetitive marketplace and dealing with consumers who are uncertain about thernfuture.”

Summary indices for futurernmarket indicators swelled substantially with calls for bids jumping to 56.3rn(from 37.5 in fourth quarter 2009)) and appointments for proposals soaring torn59.2 (from 34.4). The amount of work committed for the next three monthsrnexpanded to 33.0 (from 21.9) and the backlog of remodeling jobs alsornstrengthened to 47.2 (from 31.9).

Builder expectations for major additions increased to 53.8 from 40.0rnand for minor additions to 49.6 from 40.7. rnPerceptions of current and future work on maintenance and repair grew torn36.6 from 27.1.

The index of current conditionsrnimproved in three regions; only the West showed a continued deterioration inrnbuilders' perceptions, dipping to 36.6 from 41.7.  In the Northeast the current condition indexrnhad a huge increase from 27.7 in the fourth quarter to 45.8. The indexrnincreased from 37.5 to 37.0 in the Midwest and 40.0 to 49.0 in the South. 

NAHBrnRemodelers Chairman Donna Shirey said of the data, “Remodelers are receivingrnmore calls for work, but getting signed contracts is still challenging. We'rernworking a little more, but not making more due to tighter margins, onerousrnfederal regulations, and consumer anxiety about making large purchases.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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