Homeowners are slowly re-entering the remodeling market, according to the National Association of Home Builders' (NAHB) Remodeling Market Index (RMI).
The NAHB reports that its remodeling index has increased from 41.5 in the fourth quarter of 2010 to 46.5 in the first quarter of 2011, indicating a potential recovery.
This is the highest level for the RMI since the fourth quarter of 2006, although an RMI below 50 indicates that more remodelers report market activity is lower compared with the prior quarter than those who report it is higher.
The overall RMI combines ratings of current remodeling activity with indicators of future activity like calls for bids, according to the NAHB. Current market conditions for the first quarter of 2011 rose from 43.3 in the previous quarter to 46.1. Future market indicators climbed from 39.7 in the previous quarter to 46.8.
“Remodelers report a jump in activity so far this year and have been receiving more calls for work and appointments,” says NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Fort Collins. “However, many home owners are still slow to commit to remodeling due to feeling uncertain about the economic recovery and difficulty obtaining loans.”
Below are the top reasons prospective customers have told remodelers that they are waiting to remodel their homes:
• It is difficult to get financing (90 percent of remodeler respondents);
• They have lost equity in their homes (81 percent);
• They are uncertain about their future economic situation (74 percent);
• Reluctance to invest in home when not sure home will hold its value (67 percent);
• Negative media stories making them more cautious (62 percent);
• Inaccurate appraisals make financing more difficult (54 percent).
“Home remodeling continues to slowly increase and continued growth through the year is expected,” says NAHB Chief Economist David Crowe. “The fact that some indicators are breaking 50 means remodelers are seeing improving activity in their markets. While credit scarcity and economic uncertainty continue to weigh down remodeling, signs of increasing consumer interest are promising.”
Here’s a look at current remodeling market indicators compared with the fourth quarter of 2010, all of which have increased, according to the NAHB’s Remodeling Market Index:
For more information about remodeling, visit www.nahb.org/remodel.
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