Remodelers saw market conditions worsen in this year’s second quarter, according to the latest NAHB Remodeling Market Index (RMI).

From the first to the second quarter of this year, components of the RMI measuring remodelers’ assessment of current and future market indicators combined fell from 47.9 to 40.7. Current market conditions dropped from 44.5 to 42.6 and future indicators slumped from 43.1 to 38.9.

The RMI measures market demand for current and future residential remodeling projects based on remodelers’ perceptions and indicators of future activity like calls for bids. On a scale of one to 100, any number below 50 indicates that more remodelers say conditions are negative than positive.

The RMI has been running below 50 since the final quarter of 2005, although it was approaching the break-even point in this year’s first quarter.

“Remodelers are suffering from weak consumer confidence and constricted credit lines,” said NAHB Remodelers Chair Donna Shirey, CGR, CAPS, CGP, a remodeler from Issaquah, Wash. “Home owners are delaying remodeling projects because of economic uncertainty.”

Current conditions worsened in the second quarter in the Northeast and South, where the index dropped from 46.6 to 41.4 and from 44.1 to 42.4, respectively. That index climbed from 43.8 to 44.7 in the Midwest and from 34.8 to 42.0 in the West.

Quarter to quarter, major additions skidded from 48.0 to 44.2, minor additions fell from 47.3 to 45.8 and maintenance and repairs dropped from 37.3 to 36.6.

All component indices of future remodeling business were lower in the second quarter than in the first, with calls for bids sliding from 49.4 to 46.2, work committed for the next three months from 29.9 to 27.9, the backlog of remodeling jobs from 44.8 to 37.7 and appointments for proposals from 48.1 to 43.7.

Composition of Remodeling Projects

Responding to special survey questions on the changing composition of remodeling projects, 61% of the remodelers said bathroom remodeling was one of their most common projects during the first half of 2010, followed by kitchen remodels, at 52%. In previous years, more than 70% of the respondents said that kitchen remodeling was their most common activity.

In general, survey results show that larger remodeling projects — such as room additions, whole-house remodeling, bathroom additions and second-story additions — have been trailing down for several years. At the same time, smaller remodeling jobs — such as window and door replacement — have remained relatively steady, or, in the case of handyman services, have actually increased.

Only 29% of remodelers reported that room additions were a common activity in 2010, down sharply from 70% in 2004. Conversely, one-third of the remodelers were regularly doing handyman work in the first half of this year; none said they performed these services in 2004.

“While remodelers are continuing to struggle, we expect the rest of 2010 to be a period of stabilization for remodeling, with the first stages of recovery emerging by the end of the year, followed by a more robust recovery beginning early next year,” said NAHB Chief Economist David Crowe. “For now, professional remodelers are taking on smaller projects and working to find consumers willing to spend money despite the economic uncertainty.”

For more information about remodeling, visit www.nahb.org/remodel; or e-mail Kelly Mack at NAHB, or call her at 800-368-5242 x8451.

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