Home owners dramatically cut back contracting large and small remodeling projects in the third quarter as the economic downturn deepened, according to NAHB’s latest Remodeling Market Index (RMI), which was released last week.
“Remodelers reported a drop in major home improvements, and expectations for future work have also declined,” said NAHB Remodelers Chairman Lonny Rutherford, CGR, CAPS, CGP, president of Legacy Construction, Inc. in Farmington, N.M. “A slight increase in minor remodeling projects for owner-occupied home suggests customers are cutting back on home improvement spending.”
The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number over 50 indicates that the majority of remodelers view market conditions as improving The RMI has been running below 50 since the final quarter of 2005.
The RMI’s current market conditions indicator dropped to 33.5 in the quarter ending in September, down from 41.8 the previous quarter. Future expectations of remodeling work slid to 27.7 from 38.0. Bothare the lowest leves recorded since the RMI first started tracking remodeling activity in 2001.
Nationally, major additions and alterations shrank to 29.38 from 43.18 in the second quarter, while minor additions and alterations dropped to 38.51 from 42.89. Maintenance and repair dropped fell from 39.06 to 30.92.
“The remodeling market declines follow the pattern of the home building slowdown to a lesser degree,” said NAHB Chief Economist David Seiders.
The remodeling market has tightened as more home builders have taken on remodeling work, creating a more competitive market and flattening out calls for bids and appointments for proposals.
Current market conditions fell in three of the four regions during the third quarter, with declines from 40.1 to 31.5 in the South, from 52.9 36.2 in the Midwest and 42.4 to 36.1 in the West. The Northeast rose slightly from 32.8 to 32.9.
All measures of future expectations on the index ― calls for bids, amount of work committed for next three months, backlog of remodeling jobs and appointments for proposals — declined across all four regions during the third quarter.
In the “special questions” section of the RMI survey, 26% of the respondents reported receiving calls for work to improve home energy-efficiency, up 2% from the level reported in 2006.
While low-energy windows remained the energy-efficient product most commonly requestes by customers, 50% of remodelers in the survey reported installing water-saving faucets and fixtures, up from 36%, and 38% reported installing on-demand water heaters, up from 29%.