Remodeling Industry Sees Optimism Despite COVID-19
The National Association of Home Builders (NAHB) released its Remodeling Market Index (RMI) in the second quarter of 2020, posting a reading of 73. This is the second quarter with a new RMI, redesigned to ease respondent burden and improve its ability to interpret and track industry trends. The new series is not seasonally adjusted, therefore index readings cannot be compared quarter to quarter.
"Many remodelers are busy, even busier than prior to COVID-19. Home owners are calling for decks, patios, porches, and kitchen and bathroom jobs," said NAHB Remodelers Chair Tom Ashley, Jr., CAPS, CGP, CGR, a remodeler from Denham Springs, La. “Their optimism for a stronger market is evident through their RMI responses.”
The new RMI survey asks remodelers to rate five components of the remodeling market as “good,” “fair” or “poor.” Each question is measured on a scale from 0 to 100, where an index number above 50 indicates that a higher share view conditions as good than poor.
The Current Conditions Index is an average of three of these components: the current market for large remodeling projects, moderately-sized projects and small projects. The Future Indicators Index is an average of the other two components: the current rate at which leads and inquiries are coming in and the current backlog of remodeling projects. The overall RMI is calculated by averaging the Current Conditions Index and the Future Indicator Index. Any number over 50 indicates that more remodelers view remodeling market conditions as good than poor.
In the second quarter, all components and subcomponents of the RMI were well above 50. The Current Conditions Index averaged 77, with large remodeling projects ($50,000 or more) yielding a reading of 70, moderately-sized remodeling projects (at least $20,000 but less than $50,000) at 78 and small remodeling projects (under $20,000) with a reading of 83.
The Future Indicators Index averaged 70, with the rate at which leads and inquiries are coming in at 72 and the backlog of remodeling jobs at 67.
In an effort to track quarterly trends, the redesigned RMI survey asks remodelers to compare market conditions to three months earlier, using a ‘better,’ ‘about the same,’ ‘worse’ scale. This index posted a reading of 66, indicating that market conditions have improved substantially since the first quarter.
“An RMI of 73 indicates positive remodeler sentiment, and a change index of 66 indicates that business has picked up since the previous quarter as home owners focus on the importance of home for work and life amidst the pandemic,” said NAHB Chief Economist Robert Dietz. “However, rising material prices and ongoing skilled labor access represent ongoing supply-side challenges.”
For the full RMI tables, please visit www.nahb.org/rmi.