Remodeling and replacement activity nationwide grew 5.5% in the second quarter from the year-earlier period to produce its best showing since at least before the housing boom, Metrostudy reported today with the release of its latest Residential Remodeling Index (RRI).
The index of economic indicators hit 100.8 for the April-to-June period, topping the high-water mark of 100 set in the first quarter of 2007. Metrostudy, the Hanley Wood division that provides primary and secondary market information to the housing and residential construction industry, previously had thought the RRI wouldn't reach 100 until this fall.
“Growth through the first two quarters of 2015 is much stronger than what was observed in 2014, when the overall housing market had cooled,” Brad Hunter, Metrostudy's chief economist, said in a statement. “A big driver of recent remodeling activity has been solid job gains, but the industry stands to benefit even more over the next year from existing home sales hitting an eight-and-a-half year high at the end of second quarter. Stronger resales benefits remodeling activity, as recent homebuyers typically spend more on home improvements than other homeowners. Continued home price appreciation is also encouraging people to put money into their homes.”
Metrostudy now forecasts year-over-year RRI growth of 5.9% in the third quarter, 5.5% in the fourth quarter, 4.8% in the first quarter of 2016 and 4% in the second quarter of next year. It also believes that the number of pro-worthy projects for all 2015 will total 11.1 million, a 6% gain from 2014.
The RRI is produced through a statistical model that leverages detailed data on remodeling activity, including household-level remodeling permits, and consumer-reported remodeling and replacement projects. “Activity” includes home improvement and replacement projects, but does not include maintenance or projects of less than $1,000.
Metrostudy also issues RRIs for each of 381 metropolitan statistical areas (MSAs) in the U.S. This year, 355 MSAs are expected to see year-over-year growth in their remodeling and replacement projects, with average growth of about 5%.
The national RRI has risen 13 straight quarters year-over-year since the end of 2011, Metrostudy noted.