Remodeling Market Sentiment Declines in Third Quarter
The National Association of Home Builders (NAHB) released its NAHB/Westlake Royal Remodeling Market Index (RMI) for the third quarter, posting a reading of 65, declining three points compared to the previous quarter.
The NAHB/Westlake Royal 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 components: the current market for large remodeling projects, moderately-sized projects and small projects. The Future Indicators Index is an average of 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 Indicators Index. Any number over 50 indicates that more remodelers view remodeling market conditions as good than poor.
The Current Conditions Index averaged 72, falling five points compared the previous quarter. All three components declined in the third quarter: the component measuring large remodeling projects ($50,000 or more) decreased five points to 67, the component measuring moderate remodeling projects (at least $20,000 but less than $50,000) fell four points to 73, and the component measuring small-sized remodeling projects (under $20,000) decreased by five points to 76.
The Future Indicators Index fell three points to 57 compared to the previous quarter. The component measuring the current rate at which leads and inquiries are coming in dropped three points to 56, and the component measuring the backlog of remodeling jobs decreased by two points to 59.
“While there is still demand for remodeling, we are seeing some customers pull back a bit, especially for larger projects, due to higher prices and increased interest rates,” said NAHB Remodelers Chair Alan Archuleta, a remodeler from Morristown, N.J.
“Although the RMI is down slightly, it remains in positive territory,” said NAHB Chief Economist Robert Dietz. “The remodeling market, less impacted by interest rates, continues to outperform new construction, increasing from 31% of total residential construction in 2002 to 43% in second quarter 2023.”
For the full RMI tables, please visit nahb.org/rmi.