WASHINGTON – The National Association of Home Builders (NAHB) released its NAHB/Westlake Royal Remodeling Market Index (RMI) for the second quarter, with a reading of 77, down 10 points compared to the second quarter of 2021.
“While most remodelers across the country remain positive about the market, an increasing number are beginning to experience symptoms of a slowdown,” said NAHB Remodelers Chair Kurt Clason, a remodeler from Ossipee, N.H. “Some customers are showing a reluctance to move forward .with projects due to the higher costs and delays associated with material shortages, as well as higher interest rates.”
The NAHB/Westlake Royal RMI survey asks remodelers to rate five components of the remodeling market as “good,” “fair” or “poor.” Each question is measured on a scale from 0 to 100, where an index number above 50 indicates that a higher proportion sees the conditions as good than bad.
The Current Conditions Index is an average of three components: the current market for large remodeling projects, moderate projects, and small projects. The Future Indicators Index is an average of two components: the current rate at which leads and inquiries are coming in, and the current backlog of remodeling projects. The total RMI is calculated by taking an average of the Current Conditions Index and the Future Indicators Index. Any number above 50 indicates that more remodeling workers view remodeling market conditions as good than bad.
The current conditions index averaged 83, down eight points compared to the second quarter of 2021. All three components also declined: the component measuring major remodeling projects ($50,000 or more) fell 11 points to 79, the component measuring moderate remodeling projects ( at least $20,000 but less than $50,000) fell seven points to 84, and the component measuring small remodeling projects (under $20,000) fell six points to 86.
The Future Indicators Index fell 11 points to 72 compared to the second quarter of 2021. The component measuring the current rate at which leads and inquiries are coming in fell 13 points to 68, and the component measuring the backlog of remodeling jobs fell 10 points to 76.
“The RMI remains solidly in positive territory above 50, but has declined year-over-year, particularly the RMI component for major remodeling projects over $50,000,” said NAHB Chief Economist Robert Dietz. “This suggests some weakness in the market and is consistent with NAHB’s forecast that remodeling spending, like new construction, will decline in 2022. However, NAHB’s forecast continues to have remodeling outperforming single-family construction in 2022 and 2023 regarding growth rates.”
The NAHB/Westlake Royal RMI was redesigned in 2020 to ease respondent burden and improve its ability to interpret and track industry trends. As a result, readings cannot be compared quarter to quarter until enough data is collected to seasonally adjust the series. To track quarterly trends, the redesigned RMI survey asks remodelers to compare market conditions to three months earlier using a “better,” “about the same,” “worse” scale. Twenty-one percent of remodelers said the market had gotten worse in the second quarter of 2022, compared to just 11 percent who said it had gotten better. This is the first time the “worse” has exceeded the “better” percentage since the first quarter of 2020 (the quarter of the start of the pandemic).