Five Metros See Remodeling Activity Uptick
authors Kacey Larsen
Despite a nationwide housing slowdown, some cities have bucked the trend and posted gains in remodeling activity, according to the latest from BuildFax in its Housing Health Report for May 2019. This emerges as overall remodel volume—which BuildFax considers a subset of “maintenance” that includes renovations, additions and alterations—decreased 3.94 year-over-year while remodel spend fell 2.66 percent. Of the top 10 metropolitan statistical ares, five reported gains. Philadelphia and Chicago saw the greatest gains year-over-year in remodeling activity, rising 15.2 percent and 5.06 percent respectively. Growing at more modest rates, Los Angeles saw 1.57 percent increase; Miami saw 0.39 percent; and Washington, D.C. saw 0.25 percent, according to BuildFax.
The Philadelphia metro stands out for resisting the national trend of housing activity decline, posting gains and beating records for the number of houses sold from October to December 2018. BuildFax notes these gains—again, the city posted a 15.2 percent increase in remodeling activity—could be attributed to increased domestic migration to the city or housing investments. In both Chicago and Los Angeles, gains in remodeling activity are likely caused by homebuyers reinvesting in current properties rather than entering the market or opting for new construction, explains BuildFax.
According to BuildFax’s report, maintenance spend in total rose 4.48 percent, although existing housing maintenance volumes are beginning to decline, dropping 1.01 percent year-over-year this May. The dichotomy between maintenance spend and maintenance volume is likely due to labor shortages in the construction industry and other economic factors, like the impact of recent tariffs on building materials.
The BuildFax Housing Health Report also showed that single-family housing authorizations—which represent building permits requesting permission to commence construction—rose modestly from April to May 2019, reflecting a 0.46 percent gain. That said, the report indicates that year-over-year single-family authorizations have fallen 3.5 percent. Additionally, the trailing three-month outlook, spanning March to May 2019, decreased 4.76 percent, a sixth consecutive month of declining activity; this is in start contrast to May 2018 when the trailing three-month view increased 7.78 percent over the 2017 time period.
“The combination of declining mortgage rates, moderating home prices and peak home-buying season should be helping to buoy the housing market, but so far this hasn’t happened,” says Jonathan Kanarek, BuildFax COO. “Continued declines in year-over-year maintenance and single-family housing authorizations further reinforce the ongoing housing slowdown. As we near six months of declining activity, the question remains, how long will this slump persist?”
News item originated via reporting from Housing Wire’s Jessica Guerin, which can be found here. BuildFax conducted this study by examining properties in the U.S. between 2013 and 2019. Statistics in the report are calculated using sampled data from across the U.S., and estimates are as of June 8, 2019.