Remodeling in the United States showed strong third quarter 2012 improvement according to data from the National Association of Home Builders (NAHB) - including a jump in the index of major remodeling jobs, which often include new appliances.
NAHB's Remodeling Market Index (RMI) climbed to 50 in the third quarter of 2012, up from 45 in the previous quarter. The increase puts the RMI at its highest point since the third quarter of 2005.
An RMI above 50 means more remodelers report market activity is higher (than in the prior quarter) than report it is lower.
The RMI component measuring current market conditions rose from 46 in 2Q 2012 to 52 in 3Q 2012. The component measuring future indicators increased from 44 to 49.
"The strength of the RMI, especially in owner-occupied properties, shows that home owners are investing in remodels as home prices stabilize," said NAHB Remodelers Chairman George "Geep" Moore Jr., GMB, CAPS, GMR, a remodeler from Elm Grove, LA4. "As owners become more confident that investments in housing will hold their value, they are beginning to undertake projects to improve their comfort that they had been putting off."
The "major additions and alterations" indicator of current market conditions, showed the strongest improvement. This is the indicator most likely to include major appliance purchases.
All three indicators of current market conditions were up: maintenance and repairs rose from 50 to 56; minor additions and alterations from 47 to 51; and major additions and alterations from 42 to 49.
All four U.S. regions showed current market conditions improving or holding steady in 3Q 2012. Current remodeling activity was strong in owner-occupied housing, NAHB said. The sub-components of the current conditions index for owner-occupied housing were all between 55 and 60.
Future market indicators in all U.S. regions except the Northeast showed gains from the previous quarter.
All future market conditions indicators saw an increase: calls for bids, amount of work committed for next three months, backlog of remodeling jobs, and appointments for proposals.
"The improvement in the RMI provides more evidence that the remodeling industry is making the orderly recovery from its low point in 2009 as we've been expecting," said NAHB Chief Economist David Crowe. "Although remodeling projects over $25,000 are now showing some signs of strength, they are still lagging behind smaller property alterations and maintenance and repair jobs. The recovery of the remodeling market in general, and large projects in particular, continues to be constrained by factors such as tight credit and problematic appraisals."
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