Economic conditions nationwide for remodeling improved again in the first quarter, with the nation's 381 metro areas likely to average 5% growth in remodeling and replacement projects this year, Metrostudy forecast today.
Metrostudy, Hanley Wood's data unit and a sister company of REMODELING, said its Residential Remodeling Index (RRI) rose to 98.6 in the first quarter. That's a 1.4% improvement from 2014's final quarter and a 4% gain from the January-to-March period of last year. The index uses as a baseline of 100, which represents the economic conditions in spring 2007. That's the last time the market peaked. Thus, the latest score indicates activity nationwide equates to 98.6% of what it was then. At its current pace, the RRI should top 100 in the third quarter.
The RRI has now posted 12 consecutive quarters of year-over-year gains since the remodeling industry bottomed out at the end of 2011, Metrostudy noted.
“Remodeling activity in the U.S. continues to benefit from healthy job gains, increased consumer sentiment, and better household formation numbers,” said Brad Hunter, Metrostudy's chief economist. "Job growth laid an egg in March, but bounced back in April, easing fears that the economy is heading back to another extended slowdown. The missing piece that most Americans are waiting for, however, is meaningful wage gain. Remodeling and replacement activity is high right now for those with fatter wallets, mainly baby-boomers and mature families. Strength especially lies with retirees seeking to age in place in their current homes.”
The RRI is meant to focus on home improvement and replacement projects worth at least $1,000. It does that via a statistical model that leverages key data points known to influence remodeling activity, such as the number of household-level remodeling projects that get issued.