Residential remodeling activity remained sluggish during the second quarter of 2008, according to the National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI). The current market conditions indicator rested at 41.8, the same level as the first quarter, while the future expectations measure rose slightly to 38 from 37.9 in the previous quarter.
“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.”
Nationally, major additions and alterations declined slightly to 43.18 (from 44.15) during the second quarter, while minor additions and alterations increased slightly to 42.89 (from 41.57). Maintenance and repair declined to 39.06 (from 39.68).
“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.”
Eighty-four percent of surveyed remodelers also reported home builders diversifying into remodeling due to the downturn in home building, thus contributing to more saturated remodeling market conditions.
Pending Home Sales
Some improvement is projected for existing-home sales in the months ahead, with broader gains seen by the fourth quarter as buyers take advantage of new provisions provided through the recently passed housing stimulus bill, according to the latest forecast by the National Association Of Realtors (NAR).
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in June, rose 5.3 percent to 89.0 from a downwardly revised reading of 84.5 in May, but remains 12.3 percent below June 2007 when it stood at 101.4.
Lawrence Yun, NAR chief economist, says sales have been in a pattern of rising and falling within a fairly narrow range.
“The vacillation of data from one month to the next indicates a housing market in transition,” he says. “The rise in pending home sales was broad-based with all four regions showing gains.”
Home PricesS&P/Case-Shiller Indices Decline
Data through May 2008, released by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, show annual declines in the prices of existing single-family homes across the United States generally continued to worsen in May 2008. For the second straight month, all 20 MSAs posted annual declines, nine of which are posting record lows and 10 of which are in double-digits. Both the 10-city composite and the 20-city composite are reporting record low annual declines.
“One possible bright spot is that seven MSAs, while still negative, showed some improvement in their annual figures over those reported last month. Looking at the monthly statistics, seven of the 20 metro areas were positive for the May/April reading,” says David M Blitzer, chairman of S&P’s index committee.