Remodeling Market Looks in Worse Shape in Fourth Quarter
Market conditions for residential remodeling continued to slide during the fourth quarter of 2009 in the estimation of remodelers who were surveyed for the latest NAHB Remodeling Market Index (RMI).
The component index on current market conditions fell to 36.4 in the fourth quarter, down from 39.8 in the third quarter; while future conditions dropped from 38.7 to 31.4 over that period.
Any number below 50 indicates that more remodelers say market conditions are getting worse than improving. The RMI has been running below 50 since the final quarter of 2005.
"We're hearing many remodelers have laid off workers because they have no jobs coming in and are struggling to survive," said NAHB Remodelers Chairman Donna Shirey, CGR, CAPS, CGP, a remodeler from Issaquah, Wash. "Remodelers are pounding the pavement to find work and stay open, including taking on smaller jobs and competing with unqualified contractors."
Regionally, current market conditions from the third to fourth quarter declined from 33.7 to 27.7 in the Northeast, from 43.2 to 37.5 in the Midwest and from 47.3 to 41.7 in the West. In the South, the index rose from 38.6 to 40.
Other components of the index eroded from the third to fourth quarter: major additions dropped from 41.9 to 40, minor additions from 43.2 to 40.7 and maintenance and repair from 33.1 to 27.1.
Indicators of future market activity were also down, with calls for bids falling from 46.5 in the third quarter to 37.5 in the fourth, and downward movement in appointments for proposals, from 43.5 to 34.4; in the backlog of jobs, from 37.2 to 31.9; and in the amount of work committed for the next three months, from 27.5 to 21.9.
"Although earlier quarters of 2009 showed tentative improvements for remodeling market conditions, remodelers saw work fall backward at the end of the year," said NAHB Chief Economist David Crowe. "Like new home construction, remodelers are feeling the effects of consumers' uncertain job future, their level of confidence and unwillingness to spend their equity or savings. Competition from new home construction workers entering the remodeling market and unemployed contractors have stretched an already thin customer base."
For more information about remodeling resources available from NAHB, visit www.nahb.org/remodel; or e-mail Kelly Mack, or call her at 800-368-5242 8451.