Confidence for current and future conditions among those in the remodeling industry took a tumble in the second quarter of 2022, but still remains in relatively positive territory.
The National Association of Home Builders (NAHB) has released its NAHB/Westlake Royal Remodeling Market Index (RMI) for the second quarter, posting a reading of 77 on a 0-to-100 scale, declining 10 points compared to the second quarter of 2021.
“Although most remodelers across the country are still positive about the market, a growing number are starting to experience symptoms of a slowdown,” said NAHB Remodelers Chair Kurt Clason, a remodeler from Ossipee, N.H.
“Some customers are showing a reluctance to go forward with projects due to the higher costs and delays associated with material shortages, as well as higher interest rates,” he said.
The RMI survey asks remodelers to rate five components of the remodeling market as “good,” “fair” or “poor.” 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.
The Current Conditions Index averaged 83, dropping eight points compared the second quarter of 2021. All three components declined: the component measuring large remodeling projects ($50,000 or more) fell 11 points to 79, the component measuring moderately-sized remodeling projects (at least $20,000 but less than $50,000) dropped seven points to 84 and the component measuring small remodeling projects (under $20,000) declined by six points to 86.
The Future Indicators Index dropped 11 points to 72 compared to the second quarter of 2021. The component measuring the current rate at which leads and inquiries are coming in fell 13 points to 68 and the component measuring the backlog of remodeling jobs decreased by 10 points to 76.
“The RMI remains firmly in positive territory but has declined on a year-over-year basis, particularly the RMI component for large remodeling projects over $50,000,” said NAHB chief economist Robert Dietz. “This suggests some weakness in the market and is consistent with NAHB’s projection that residential-remodeling spending, like new residential construction, will be down in 2022. However, NAHB’s forecast continues to have remodeling outperforming single-family construction in 2022 and 2023 in terms of growth rates.”
Twenty-one percent of remodelers said the market had gotten worse in the second quarter of 2022, compared to only 11 percent who said it had improved. This is the first time the “worse” has exceeded the “better” percentage since the first quarter of 2020 (the quarter of the onset of the pandemic).
For the full RMI tables, see the Website at nahb.org/rmi.