There's not much doubt where new construction sits these days -- bouncing along the bottom.
The remodeling market, on the other hand, is a lot more difficult to get a read on.
On the positive side, the BuildFax Remodeling Index has shown continued growth in remodeling activity throughout the first half of the year, with June’s mark of 129.5 [1] the highest since the company started tracking remodeling activity in 2004. That was 23 percent higher then the June 2010 number and the 20th straight month that remodeling activity has grown year-over-year, according to the index.
At the same time, NAHB’s Remodeling Market Index [2] and Harvard University’s Leading Indicator of Remodeling Activity [3] both show a markedly less optimistic view of the market.
The NAHB RMI shows a drop in activity in the second quarter of the year, dropping from 46.5 to 43.9 An RMI below 50 indicates that more remodelers report market activity is lower compared to the prior quarter than report it is higher.
The Joint Center is reporting that remodeling activity was up 1.3 percent in the second quarter, but the LIRA is projecting a 0.7 percent drop for 2011 compared to 2010. Things look even worse as the calendar rolls into 2012, with a 4 percent drop in the 12 months ending with the first quarter of next year. That would put the LIRA at $106.5 billion at the end of the first quarter of 2012 — the lowest mark on record. It was only last fall that the Joint Center was projecting double-digit percent increases in remodeling activity for 2011. Officials at the center say the continuing struggles of the economy make any recovery hard to predict.
Throw in the NKBA Kitchen & Bath Market Index [4], which stands at +21 for Q3 2011. The index forecasts the confidence of kitchen and bath dealers on a scale of -60 to +60, which shows kitchen and bath dealers are positively giddy compared to everyone else.
The four indices all use different information to come up with their numbers. The BFRI measures remodeling activity by analyzing monthly building permits filed with local building departments across the country, but isn’t looking at project size. The NAHB's and NKBA's are based on surveys of their members, and the LIRA is estimated from a number of factors including home sales, retail spending and building product shipments.
Without a concrete number, like starts for builders, we just don't know for sure. The BFRI, despite its flaws, gives us the most historic information, but offers no forward-looking insight. In the end, though, it doesn't really matter if any of them are "right" because the market is going to vary in every municipality and its probably sheer folly to try to track it on a national basis.
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