Remodeling Market Sentiment Improves in Fourth Quarter

Economics
Published
Contacts: Stephanie Pagan
spagan@nahb.org
(202) 266-8254

Elizabeth Thompson
ethompson@nahb.org
(202) 266-8495

The National Association of Home Builders (NAHB) released its NAHB/Westlake Royal Remodeling Market Index (RMI) for the fourth quarter, posting a reading of 67, increasing two 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 74, increasing two points compared the previous quarter. All three components improved in the fourth quarter: the component measuring large remodeling projects ($50,000 or more) increased three points to 70, the component measuring moderate remodeling projects (at least $20,000 but less than $50,000) rose two points to 75, and the component measuring small-sized remodeling projects (under $20,000) increased two points to 78.

The Future Indicators Index increased two points to 59 compared to the previous quarter. The component measuring the current rate at which leads and inquiries are coming in remained even at 56, and the component measuring the backlog of remodeling jobs rose three points to 62.

“Remodelers’ sentiment was quite positive at the end of 2023, when seasonally adjusted for the slowdown that invariably occurs during that part of the year,” said NAHB Remodelers Chair Alan Archuleta, a remodeler from Morristown, N.J. “High costs remain an issue in some places, but in many markets customers seem to have adjusted to the unavoidable higher prices.”

“The seasonally adjusted RMI edged up on a quarterly basis at the end of 2023, although it was down slightly year-over-year,” said NAHB Chief Economist Robert Dietz. “Nevertheless, the index remains solidly in positive territory as it has been ever since the second quarter of 2020. Looking forward, we expect market conditions to improve throughout 2024, as interest rates continue to decline.”

For the full RMI tables, please visit nahb.org/rmi.