Real estate remodeling picks up pace

Residential remodelers are bullish in their economic outlook for 2004, according to the National Association of Home Builders, which today reported its Remodeling Market Index (RMI) rose to a record level of 59 in the first quarter.

“When the RMI moves above 50, it tells you that the industry is very healthy, and right now we are at 59,” NAHB Remodelors Council Chairman Douglas Sutton Sr., a remodeler in Springfield, Ill. “Not only have we recorded the strongest first-quarter index rating in four 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 three months, job backlogs and appointments for proposals. A variety of “special questions” are also asked at the end of the survey to help pinpoint market trends.

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 region posted increases over gains from 2003’s first quarter, with the most significant change occurring in the Midwest, where the index jumped by 17.6 points to a healthy 62.1.