Home Remodeling Industry in U.S. Slowing Under Economic Uncertainty
Against the backdrop of rising U.S. unemployment, rising debt ceilings, Government credit defaults, the National Association of Home Builders' (NAHB) Remodeling Market Index
(RMI) reported this week that the U.S. remodeling sector is declining under the pressure of a sluggish economy and financial uncertainty.See related news story on WORLD PROPERTY CHANNEL:
During the second quarter the RMI dipped to 43.9 from the first quarter result of 46.5. An RMI below 50 indicates that more remodelers report market activity is lower compared to the prior quarter than report it is higher.
The overall RMI combines ratings of current remodeling activity with indicators of future activity, like calls for bids. Current market conditions for the second quarter of 2011 fell to 44.8 from 46.1 in the first quarter. Future market indications dropped to 43.0 from 46.8 in the previous quarter.
"Remodelers have experienced the same hiccup that has rippled through the U.S. economy," said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. "After picking up the pace early in the year, the calls from customers dropped off and remodeling slowed down."
Regionally, current market conditions shrank in two areas: the Midwest to 44.4 (from 47.1 in the first quarter) and the South to 42.9 (from 46.1). The West at 48.2 (from 46.1) and Northeast at 48.1 (from 46.1) both climbed modestly.
Two indicators of current market conditions dropped: major additions to 46.2 (from 50.3 in the first quarter) and maintenance and repair to 38.4 (from 39.5). A third indicator, minor additions, remained essentially flat at 48.5 (from 48.0). Future market indicators also descended: calls for bids to 49.8 (from 53.1), backlog of remodeling jobs to 45.7 (from 49.7), and appointments for proposals to 44.2 (from 52.4). The amount of work committed for the next three months stayed level at 32.3 (from 32.1).
"While the RMI indicates that the home remodeling market softened somewhat in the second quarter, this is still the second highest RMI we've been able to report since the third quarter of 2007," said NAHB Chief Economist David Crowe. "There are several barriers blocking the way to a stronger recovery. Home owners who may want to remodel still face stringent lending requirements, and uncertainty about the economy is making them hesitant to undertake major improvements."