Remodeling Market Continues To Deteriorate Under Strained Economy

Market conditions for residential remodeling dropped during the fourth quarter of 2009 to 36.4 from 39.8 in the third quarter, according to the latest National Association of Home Builders’ Remodeling Market Index (RMI). The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number below 50 indicates that more remodelers say market conditions are getting worse than report improving conditions.

The index for current remodeling market conditions slumped in most regions and on all types of projects:

• In the Northeast down to 27.7, from 33.7 in the third quarter
• In the Midwest to 37.5, down from from 43.2
• In the West down to 41.7, from 47.3.
• Major additions declined to 40. from 41.9.
• Minor additions fell to 40.7, from 43.2.
• Maintenance and repair plunged to 27.1, from 33.1.

One bright spot was the South, where the current index rose slightly to 40, from 38.6.
 
Summary indices for future market indicators exhibit bleak expectations for the remodeling market. Calls for bids dropped to 37.5, from 46.5 in the third quarter. Appointments for proposals slid to 34.4 from 43.5. The backlog of jobs reduced to 31.9 from 37.2 and the amount of work committed for the next three months fell to 21.9 from 27.5.
 
According to NAHB Chief Economist David Crowe, although earlier quarters of 2009 showed tentative improvements for remodeling market conditions, remodelers have seen work fall backward at the end of the year. Remodelers are feeling the effects of consumers’ uncertain job future, their level of confidence and unwillingness to spend their equity or savings.  The RMI has been running below 50 since the final quarter of 2005.