Remodeling market deteriorates during recession

by WOHe

WASHINGTON, Feb. 10 – Market conditions for residential remodeling tumbled downward during the fourth quarter of 2009, according to the latest National Association of Home Builders’ Remodeling Market Index. The current market conditions index fell to 36.4 from 39.8 in the third quarter. The index of future indicators dropped to 31.4 from 38.7 in the previous quarter.

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 RMI has been running below 50 since the final quarter of 2005.

“We’re hearing many remodelers have laid off workers because they have no jobs coming in and are struggling to survive,” said NAHB Remodelers Chairman Donna Shirey, CGR, CAPS, CGP, a remodeler from Issaquah, Wash. “Remodelers are pounding the pavement to find work and stay open, including taking on smaller jobs and competing with unqualified contractors.”

The index for current remodeling market conditions slumped in the Northeast to 27.7 (from 33.7 in the third quarter), descended in the Midwest to 37.5 (from 43.2) and decreased in the West to 41.7 (from 47.3). In the South, the current index rose slightly to 40 (from 38.6). Major additions declined to 40 (from 41.9), and minor additions also fell to 40.7 (from 43.2). Maintenance and repair plunged to 27.1 (from 33.1).

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) and 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).

“Although earlier quarters of 2009 showed tentative improvements for remodeling market conditions, remodelers have seen work fall backward at the end of the year,” said NAHB Chief Economist David Crowe. “Like new home construction, remodelers are feeling the effects of consumers’ uncertain job future, their level of confidence and unwillingness to spend their equity or savings. Competition from new home construction workers entering the remodeling market and unemployed contractors has stretched an already thin customer base.”

Get more information about remodeling from the NAHB Remodelers.

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