Homeowners Adopt "Wait and See" View of Remodeling

According to the National Association of
Home Builders
(NAHB) the remodeling industry has been increasingly impacted by
the state of the national economy.  After
hitting a four-year high of 46.5 in the first quarter of this year, NAHB’s
Remodeling Market Index (RMI)  dropped to
43.9 in the second quarter and, in third quarter data released on Thursday, is
now at 41.7.  An RMI below 50 indicates
that more remodelers report that market activity is declining than report that
it is increasing.

“Remodelers report that while many consumers show interest in having
remodeling work done, they are slow to commit to projects,” said NAHB Remodelers
Chairman Bob Peterson. “Consumers are in a ‘wait and see’ mode with regard
to current economic conditions.”

The overall RMI combines ratings of
current remodeling activity with indicators of future activity.  In the third quarter, the RMI component
measuring current market conditions fell to 43.0 from 44.8 in Quarter Two.  All three factors within that component also
dropped; work on major additions decreased from 46.2 to 45.2; minor additions to
45.7 from 48.5, and maintenance and repair to 37.1 from 38.4.

The component measuring future
indicators of remodeling business and its underlying factors declined as well.  The future indicator was down from 43.0 in
the last quarter to 40.4 and calls for bids decreased from 49.8 to 45.4; the
amount of work committed for the upcoming three months declined from 32.3 to
29.9; job backlog from 45.7 to 43.0, and appointments for appraisals to 43.3
from 44.2.

Regionally, current remodeling market
conditions shrank in the Northeast to 43.9 (from 48.1 in the second quarter) and
the West to 40.9 (from 48.2) while increasing in the Midwest at 46.8 (from 44.4) and the South at
47.1 (from 42.9). Future market indicators fell in all regions, except for the
South, where it edged up to 42.2 from 41.6 in the second quarter.

“The current economic instability continues to affect consumer confidence,
therefore we have seen a drop off in remodeling activity for the last two
quarters,” said NAHB Chief Economist David Crowe. “In order for the
remodeling market to pick up, home owners need to have access to less
restrictive lending requirements and see their economic future
stabilizing.”

Article source: http://www.mortgagenewsdaily.com/10272011_nahb_remodeling.asp

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