Builders: Remodeling Sentiment Up in 1Q 2023
The pandemic pushed many stuck-at-home owners to remodel, and a fear of losing ultra-low mortgage rates is now convincing some to upgrade rather than sell.
WASHINGTON, – The National Association of Home Builders’ (NAHB) NAHB/Westlake Royal Remodeling Market Index (RMI) for the first quarter posted a reading of 70 – up one point compared to the previous quarter.
The index measures builders’ attitudes about the remodeling market. “Current conditions” looks at three components: large remodeling projects, moderately-sized projects and small projects. The Future Indicators Index has two components: the current rate for leads and inquiries coming in and the current backlog of remodeling projects.
The overall RMI averages the Current Conditions Index and the Future Indicators Index. Any number over 50 indicates that more remodelers view market conditions as good rather than poor.
The Current Conditions Index averaged 75, dropping two points compared the previous quarter (4Q 2022). Two of the three components declined as well: the component measuring large remodeling projects ($50,000 or more) fell three points to 71 and the component measuring small remodeling projects (under $20,000) declined by two points to 77.
However, the component measuring moderately-sized remodeling projects (at least $20,000 but less than $50,000) remained unchanged at 78.
The Future Indicators Index increased two points to 64 compared to the previous quarter. The component measuring the current rate at which leads and inquiries are coming in rose two points to 59 and the component measuring the backlog of remodeling jobs increased two points to 69.
“Remodelers are generally optimistic about the home improvement market, although some are noting negative effects of material shortages and higher interest rates,” says NAHB Remodelers Chair Alan Archuleta. “Customers are still undertaking larger projects, but are mostly paying cash rather than financing them.”
“An overall RMI of 70 is consistent with NAHB’s projection that the remodeling market will grow in 2023, but at a slower pace than in 2022,” adds NAHB Chief Economist Robert Dietz. “One potential area of growth, given the aging U.S. population, is aging-in-place remodeling. In fact, 63% of remodelers reported in the first quarter doing aging-in-place work, with bathroom projects like grab bars and curb-less showers being particularly common.”
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