WASHINGTON, D.C. (August 14, 2012) — The level of remodeling and replacement project activity nationally improved slightly in the second quarter of 2012, according to the latest release of the Residential Remodeling Index (RRI) by Hanley Wood. The seasonally adjusted second quarter national composite of the RRI registered a score of 80.87, which was a 0.3 percent improvement over the revised upward first quarter result of 80.63.
The increase quarter-to-quarter was the first increase in six quarters, as the industry experienced a decline in activity as energy-related tax credits expired at the end of 2010 and both housing and the general economy failed to live up to expectations in 2011. But now, due in part to improving housing conditions in many markets in the country, remodeling and replacement activity is again on the rise and is forecasted by Hanley Wood to improve for many quarters to come.
Estimated remodeling and replacement projects for 2011 came in at just over 10 million, or a decline of 5 percent over the 10.5 million estimated projects completed in 2010. Hanley Wood is now forecasting 2012 to see just over 10.1 million large, pro-worthy remodeling and replacement projects in 2012 and back up to 10.5 million pro-worthy projects in 2013.
"As we had forecasted, we are starting to see remodeling and replacement activity increase as healthy home sales activity is growing in many markets and consumers are starting to see home prices stabilize and even rise," said Jonathan Smoke, the executive director of Hanley Wood Market Intelligence. "While the economy has been slowing down, housing has been showing it has its own pulse. With healthy home sales rising, home prices showing appreciation, and new construction and remodeling coming off of lows, residential construction will once again become a positive contributor to economic growth."
According to the new RRI data, growth will be wide-spread 2013. "Improving housing conditions are clearly buoying consumers to feel confident about making improvements in their homes that they may have postponed for several years. Combine that with aging homes and aging boomers, you get a recipe for strong growth in remodeling and replacement well into the future" Smoke added. The latest Hanley Wood report forecasts growth in 362 of the 366 metropolitan statistical areas tracked.
About the Residential Remodeling Index
The RRI is a quarterly measure of the level of remodeling activity in 366 metropolitan statistical areas (MSA) in the U.S., with the national composite reflecting the national level of activity. "Activity" includes home improvement and replacement projects, but does not include maintenance or projects of less than $500. The seasonally adjusted index shows the relative level of activity in the geography specified (MSA or national composite) compared to 2007 (the baseline year). A number above 100 indicates a level of remodeling activity higher than the level of activity at the beginning of 2007, which was the peak of remodeling activity in the prior decade.
The index 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. Quarterly historical results for the national composite and for each of the 366 Metropolitan Statistical Areas in the U.S. are available back to 2004. In additional, Hanley Wood Market Intelligence also produces annual estimates of project counts and expenditures as well as forecasts of the quarterly RRI and annual projects and expenditures.
About Hanley Wood Market Intelligence
Hanley Wood Market Intelligence is the housing industry's leading provider of rich data and analytical services on residential real estate development and new-home construction. Through their proprietary Housing Intelligence database, Hanley Wood Market Intelligence delivers housing insights into more than 800 MSAs and 2300+ counties. www.HousingIntelligence.com
Hanley Wood, LLC is the premier media and information company serving the residential, commercial design and construction industries. Through its operating platforms, the company produces award-winning digital and print publications, e-Newsletters, websites, marquee trade shows and events, market intelligence data and custom marketing solutions. The company also is North America's leading publisher of home plans.