The National Association of Home Builders (NAHB) released its NAHB/Westlake Royal Remodeling Market Index (RMI) for the first quarter, posting a reading of 86, which remained unchanged compared to the first quarter of 2021. The finding is a signal of residential remodelers’ confidence in their markets, for projects of all sizes.
“Business remains strong for most remodelers at the beginning of 2022,” said NAHB remodelers chair Kurt Clason, a remodeler from Ossipee, New Hampshire. “However, a few are starting to report that customers are reluctant to move forward on projects due to the delays and higher costs caused by supply chain problems.”
The NAHB/Royal Building Products 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 share view conditions as good than poor.
The Current Conditions Index is an average of three components: the current market for large remodeling projects, moderately-sized 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 overall RMI is calculated by averaging the Current Conditions Index and the Future Indicators Index. Any number over 50 indicates that more remodelers view remodeling market conditions as good than poor.
The Current Conditions Index averaged 89, remaining unchanged compared to the first quarter of 2021. The component measuring large remodeling projects ($50,000 or more) rose four points to 89, while the component measuring moderately-sized remodeling projects (at least $20,000 but less than $50,000) fell one point to 89, and the component measuring small remodeling projects (under $20,000) declined by two points to 90.
The Future Indicators Index edged down two points to 82 compared to the first quarter of 2021. The component measuring the current rate at which leads and inquiries are coming in fell six points to 80, while the component measuring the backlog of remodeling jobs increased two points to 84.
“An overall RMI of 86 indicates positive remodeler sentiment and is consistent with NAHB’s projection of moderate growth in the remodeling market for 2022,” said NAHB chief economist Robert Dietz. “Nevertheless, rising interest rates and the high cost of materials are significant headwinds to the remodeling industry and the housing industry at large.”
The NAHB/Royal Building Products 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 are 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. Seventy-two percent of respondents said the remodeling market is “about the same” as it was three months earlier.