The latest National Association of Home Builders' (NAHB) Remodeling Market Index (RMI) remained essentially unchanged at 40.8 in the third quarter of 2010, compared to 40.7 in the second quarter. An RMI below 50 indicates that more remodelers report market activity is declining than those who it is increasing. The RMI has been below 50 since the fourth quarter of 2005.
The overall RMI combines ratings of current remodeling activity with indicators of future activity, such as calls for bids. In the third quarter:
• The RMI component that measures current market conditions was 43.4, up from 42.6 in the previous quarter.
• The RMI component measuring future indicators of remodeling business was 38.1, slightly down from 38.9 in the last quarter.
"Consumers remain cautious about spending due to uncertainty in the economy, high unemployment, and scarce credit," said NAHB Remodelers Chair Donna Shirey, CGR, CAPS, CGP, a remodeler from Issaquah, WA. "Homeowners may be looking at remodeling but they are scared to take the leap."
The indices for future remodeling business stayed mostly level:
• Calls for bids slipped to 42.9 (from 46.2).
• Work committed for the next three months grew to 30.3 (from 27.9).
• The backlog of remodeling jobs dipped to 37.2 (from 37.7).
• Appointments for proposals declined to 41.9 (from 43.7).
"The remodeling market hit the same mid-year stall that the rest of the housing market and the economy hit. Remodeling continues to remain weak as consumers hold off on investing in their home until they feel more confident about the overall economy," said NAHB Chief Economist David Crowe. "The economy is growing, but at a rate well below the level needed to reduce unemployment and ignite consumer confidence. For now, professional remodelers are concentrating on consumers' requests for smaller home improvements until the economic recovery strengthens."
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