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Remodelers See Encouraging Signs in Third Quarter
Although residential remodelers reported that conditions remained relatively weak during this year’s third quarter, they also saw signs that their market was stabilizing, according to NAHB’s Remodeling Market Index, which was released on Nov. 5.
The current market condition component of the index registered 39.8 for the third quarter, up slightly from 38.1 in the second quarter. Future indicators jumped from 34.2 to 38.7 over the same period. Although this marked the third straight quarterly improvement, both indices remained well below the break-even level of 50 on the index.
The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number below 50 indicates that more remodelers say market conditions are getting worse than report improving conditions. The index has been running below 50 since the final quarter of 2005.
“Some remodelers are receiving more calls for bids, but it is still extremely difficult to close a sale,” said NAHB Remodelers Chairman Greg Miedema, CGR, CGB, CAPS, CGP, a remodeler from Tucson, Ariz. “Financing continues to be an impediment, with many home owners not able to secure home equity loans or other lines of credit.”
The index for current remodeling market conditions rose in the Midwest to 43.2, up from 38.3 in the second quarter, and in the West from 40.5 to 47.3. They declined in the Northeast from 36.9 to 33.7 and in the South from 39.7 to 38.6.
Remodeler assessments of demand for major additions climbed from 38.2 to 41.9 in the third quarter. Minor additions rose from 41.5 to 43.2, while maintenance and repair remained fairly flat, dropping from 33.6 to 33.1.
The summary index of future market indicators showed greater improvement. Among the components of future indicators, calls for bids jumped from 38.8 to 46.5, appointments for proposals grew from 40.3 to 43.5, the amount of work committed for the next three months climbed from 23.3 to 27.5, and the backlog of remodeling jobs rose from 34.4 to 37.2.
“Remodelers are no longer reporting markets deteriorating to the same degree as earlier in the year, but credit and financing of remodeling jobs remains a huge hurdle to overcome in closing sales,” said NAHB Chief Economist David Crowe. “Inaccurately low home appraisals also hurt remodelers, because they hamper both home equity loans and sales of existing homes that often stimulate remodeling.”
For more information on remodeling resources available from NAHB, e-mail Kelly Mack, or call her at 800-368-5242 x8451.
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