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Week of September 8, 2003

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Remodeling Index Finds a Big Upswing in the Second Quarter

Professional remodelers were busier in this year’s second quarter than at any time in the past two years, and most expect business to continue improving in coming months, according to results of NAHB's Remodeling Market Index (RMI), which was released last week.

Surging home sales, a steady rise in home values and equity against which people borrow to finance improvements and a low-interest-rate environment all contributed to the second-quarter pickup, according to Mike Weiss, chairman of the NAHB Remodelors™ Council.

“Moreover," said Weiss, "signs of an improving economy and rejuvenating consumer confidence mean the future is looking even brighter for professional remodelers.”

The RMI index on current major and minor additions and alterations and maintenance work and repairs rose 7.2 points from the first quarter to 53.6 in the second, its highest level since the second quarter of 2001 and a three-point gain over the second quarter of 2002.


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The RMI's second-quarter gauge of future expectations also rose to its highest level in two years, to 54.8, up 4.5 points over the previous quarter and 2.6 points higher than the same period a year earlier.

“Remodelers are registering substantially more calls for bids, commitments for work over the next three months and backlogs of jobs in the pipeline than they have since at least the beginning of last year," said David Seiders, NAHB's chief economist. "That’s a good basis for a truly optimistic outlook.”

The West was the strongest region for professional remodeling in the second quarter. Every region posted gains from the previous quarter with the exception of the Northeast, where current market conditions rose but future expectations slid several points.

Of the roughly 550 remodelers who were polled for the index, 57% indicated that they had experienced significant problems in finding skilled labor over the past year; 75% identified the "quality of skilled labor" and 70% cited the "availability of skilled labor" as concerns for the remodeling industry over the next five years.

A growing concern among remodeling pros is “low bidding by fly-by-night contractors,” which 49% identified as a problem in their market during this year’s second quarter.

 “Legitimate professional remodelers are definitely raising a red flag regarding low-ball operators in their area,” said Weiss. “We’re advising consumers to ask for references, check with their local Better Business Bureau and verify that they are dealing with a reputable business before signing a contract for home remodeling and/or repairs.”


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