NAHB Remodeling Market Index Takes a Nasty Dip

Remodelers are feeling decidedly less optimistic about the remodeling market, according to the latest Remodeling Market Index from NAHB.

The index, released today, shows a drop from 47.9 in the first quarter to 40.7 in the second quarter. An RMI below 50 means more remodelers feel the market is deteriorating than feel it is improving. Last quarter was the closest the RMI has come to 50 since 2005.

The RMI increased in the Midwest (from 43.8 to 44.7) and West (42.0 from 34.8), but dropped in the Northeast (46.6 to 41.4) and South (44.1 to 42.4).

Two comments on the drop from NAHB officials:

"Remodelers are suffering from weak consumer confidence and constricted credit lines," said NAHB Remodelers Chairman Donna Shirey, CGR, CAPS, CGP, a remodeler from Issaquah, Wash. "Homeowners are delaying remodeling projects because of economic uncertainty."


"While remodelers are continuing to struggle, we expect the rest of 2010 to be a period of stabilization for remodeling, with the first stages of recovery emerging by the end of the year, followed by a more robust recovery beginning early next year," said NAHB Chief Economist David Crowe. "For now, professional remodelers are taking on smaller projects and working to find consumers willing to spend money despite the economic uncertainty."

Other questions showed that NAHB members are undertaking smaller projects than in the past, as well, with marked decreases in room additions and kitchens and increased work in bathrooms and handyman projects. We saw similar results in our Business Results Study released in April, which showed a 47 percent drop in average project size. (No link, because HousingZone isn't back up yet, but e-mail me if you'd like more info.)