WASHINGTON, Nov. 5 - Although residential remodeling remained relatively weak during the third quarter of 2009, remodelers are starting to report that conditions in their markets are stabilizing, according to the latest National Association of Home Builders' (NAHB) Remodeling Market Index (RMI). The current market conditions index rose slightly to 39.8 from 38.1 in the second quarter. The index of future indicators jumped to 38.7 from 34.2 in the previous quarter. Although this marked the third straight quarter of improvement, both indices remain well below the break-even point of 50.
The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number below 50 indicates that more remodelers say market conditions are getting worse than report improving conditions. The RMI has been running below 50 since the final quarter of 2005.
"Some remodelers are receiving more calls for bids, but it is still extremely difficult to close a sale," said NAHB Remodelers Chairman Greg Miedema, CGR, CGB, CAPS, CGP, a remodeler from Tucson, Ariz. "Financing continues to be an impediment with many home owners not able to secure home equity loans or other lines of credit."
The index for current remodeling market conditions rose in the Midwest to 43.2 (from 38.3 in the second quarter) and West to 47.3 (from 40.5), but declined in the Northeast to 33.7 (from 36.9) and South to 38.6 (from 39.7). Major additions grew to 41.9 (from 38.2). Minor additions also improved to 43.2 (from 41.5). Maintenance and repair remained fairly flat at 33.1 (from 33.6).
The summary index of future market indicators showed greater improvement. Among the components of future indicators, calls for bids jumped to 46.5 (from 38.8 in the second quarter). Appointments for proposals grew to 43.5 (from 40.3). Amount of work committed for the next three months climbed to 27.5 (from 23.3). And backlog of remodeling jobs increased to 37.2 (from 34.4).
"Remodelers are no longer reporting markets deteriorating to the same degree as earlier in the year, but credit and financing of remodeling jobs remains a huge hurdle to overcome in closing sales," said NAHB Chief Economist David Crowe. "Inaccurately low home appraisals also hurt remodelers, because they hamper both home equity loans and sales of existing homes that often stimulate remodeling."
For more information about remodeling, visit nahb.org/remodel.