Activity Remains Slow
A recent report from the National Association of Home Builders (NAHB) indicates that residential remodeling activity remained sluggish during the second quarter of 2008. According to the NAHB’s 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.
To put the report into perspective, the NAHB says 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.”
Regionally, the NAHB says 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).
“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.” MD