NAHB Debuts New Index for Remodeling Activity
The National Association of Home Builders (NAHB) has redesigned its Remodeling Market Index (RMI) in the first quarter of 2020. This eases respondent burden and improves its ability to interpret and track industry trends. The first reading for this new RMI series was 48.
“The impact of COVID-19 is visible in the remodeling industry,” said NAHB Remodelers Chair Tom Ashley, Jr., CAPS, CGP, CGR, a remodeler from Denham Springs, La. “The rate of inquiries coming in is slowing down because many home owners are wary of remodeling crews inside their homes.”
New Survey Focuses on Wider Current Trends
The new 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. 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 of these components: the current market for large remodeling projects, moderately-sized projects and small projects. The Future Indicator Index is an average of the other two components: the current rate at which leads and inquiries are coming in and the current backlog of remodeling projects. The average of the both calculates the overall RMI. Any number over 50 indicates that more remodelers view remodeling market conditions as good than poor.
The Current Conditions Index averaged 58, with large remodeling projects ($50,000 or more) yielding a reading of 53. Moderately-sized remodeling projects (at least $20,000 but less than $50,000) averaged 59. Finally, small remodeling projects (under $20,000) averaged with a reading of 62.
The Future Indicator Index averaged 39. The rate at which leads and inquiries are coming in is 30 and the backlog of remodeling jobs is 47.
COVID Impact Trending Higher
The old RMI series can no longer be used to compare with this quarter’s results. Therefore, the redesigned tool asked remodelers to compare market conditions in their areas to three months earlier, using a ‘better,’ ‘about the same,’ ‘worse’ scale. The index read 24 this quarter, indicating more remodelers thought conditions had worsened than thought conditions had bettered.
“The low reading of 24 when comparing to the previous quarter is directly related to COVID-19,” said NAHB Chief Economist Robert Dietz. “With unemployment increasing and leads decreasing, the economic impacts of the pandemic are evident in the remodeling industry.”