U.S. residential remodelers are bullish in their economic outlook for 2004, according to the National Association of Home Builders (NAHB), which released the latest results of its Remodeling Market Index (RMI). The RMI rose to a record level of 59 in the first quarter of the year, signaling positive impressions of current market conditions as well as expectations for the near future among professionals working in the U.S. $176-billion dollar remodeling industry.
"When the RMI moves above 50, it tells you that the industry is very healthy, and right now we are at 59," said NAHB Remodelors Council Chairman Douglas Sutton. "Not only have we recorded the strongest first-quarter index rating in 4 years, but across the country we are also seeing record numbers of calls for bids and reports of backlogs that will keep us busy throughout the year."
The RMI is based on a quarterly survey of 582 professional remodelers, whose answers to a series of questions were assigned numerical values to calculate two separate indexes. The first index gauges current market conditions and is based on remodelers' reports of major and minor additions and alterations, plus maintenance work, and repairs, on both owner- and renter-occupied dwellings. The second index gauges expectations for the near future and is based on remodelers' reports of their calls for bids, amount of work committed for the next 3 months, job backlogs, and appointments for proposals.
In a year-to-year comparison -- the most accurate indicator as the RMI is not seasonally adjusted -- both indexes showed improvement over the first quarter in 2003. The current market conditions index rose to 59, a 12.6-point gain from 46.4 in the first quarter of 2003. The future expectations index moved to 62.8, a 12-point gain, from 50.3 in the year-earlier period. Every U.S. region posted increases over gains from first quarter 2003, with the most significant change occurring in the Midwest, where the index jumped by 17.6 points to a healthy 62.1.
"The current market conditions index shows a very strong market, compared to the same period last year," said NAHB Chief Economist David Seiders. "The year-over-year gains in both indexes for every region are remarkable, and point to another banner year for the remodeling industry in 2004. What's more, substantial year-over-year gains are apparent for every single component of the future expectations index, including calls for bids and amount of work committed for the next 3 months, for both owner- and renter-occupied dwellings, plus overall job backlogs and appointments for proposals."
Gains were also evident in both the minor and major additions and alterations indexes, with respective gains of 13 and 15 points over last year's first quarter. The index gauging maintenance and repairs jumped 9 points from its year-earlier level.
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