Residential remodeling activity remained sluggish during the second quarter of 2008, according to the NAHB Remodeling Market Index (RMI), which was released on Aug. 12.
Current market conditions registered 41.8 on the index, unchanged from the first quarter, while future expectations rose slightly to 38 from 37.9 in the previous quarter.
Any number on the index over 50 indicates that the majority of remodelers view market conditions positively. However, the RMI has been running below 50 since the final quarter of 2005, implying a downturn in remodeling expenditures.
“Remodelers are experiencing slower activity in markets nationwide, particularly for major improvements to owner-occupied housing” said NAHB Remodelers Chairman Lonny Rutherford, CGR, CAPS, CGP, a remodeler from Farmington, N.M. “While markets remain pretty active, most remodelers are taking on a greater number of smaller jobs to maintain their businesses.”
In the estimation of the remodelers polled in the quarterly survey, major additions and alterations declined slightly to 43.18 during the second quarter, down from 44.15 in the first three months of the year, while minor additions and alterations increased a shade to 42.89, up from 41.57. Maintenance and repairs declined from 39.68 to 39.06.
“As in previous economic downturns, remodeling activity is proving to be cyclical rather than countercyclical, although the degree of decline pales in comparison to the setbacks registered in the new-home market,” said NAHB Chief Economist David Seiders. “We expect remodeling to remain generally flat in 2009, followed by strong growth due to home maintenance needs.”
Regionally, ratings for the current market in the second quarter dropped from 36.4 to 32.8 in the Northeast, from 42.2 to 40.1 in the South and from 42.9 to 42.4 in the West. Current conditions climbed to 52.9 in the Midwest, up noticeably from 44.1 in the first quarter.
All index measures of future expectations — calls for bids, the amount of work committed for the next three months and appointments for proposals — slumped by a trace, with the lone exception of backlogs in remodeling jobs, which rose to 42.13, up from 41 during the initial period of the year.
Eighty-four percent of the remodelers who were surveyed also reported seeing home builders diversifying into remodeling due to the downturn in new residential construction, which is contributing to more saturated remodeling market conditions.