WASHINGTON, D.C. (May 8, 2013) — Remodeling and replacement project activity ended 2012 better than previously estimated and first read of the first quarter of 2013 shows activity up much more than originally forecasted, based on the latest release of the Residential Remodeling Index (RRI) by Metrostudy, a Hanley Wood company. The seasonally adjusted first quarter national composite of the RRI registered a score of 86.3, which was a 1.1 percent improvement over the revised fourth quarter result of 85.3.
The increase quarter-to-quarter was the fifth solid consecutive increase after the industry experienced declines in 2011. The industry experienced the declines in activity as energy-related tax credits expired at the end of 2010 and both housing and the general economy wilted in 2011. As housing fundamentals began turning the corner in 2012, remodeling and replacement activity began to increase and is forecasted by Metrostudy to improve at a strong and consistent pace over the next several years.
“Once we received and tallied all of the permits and reported projects in 2012, we found that 2012 ended far stronger than originally estimated in January,” remarked Jonathan Smoke, Chief Economist of Hanley Wood. “And with our first read of activity in the first quarter of this year, we are seeing that the remodeling market started the year without skipping a beat. There had been a fear that the economy would fall in the first quarter and pull down home improvement activity but instead we are seeing remodeling and replacement start the year strong, just as home sales, home prices, and new construction has also started 2013.”
Smoke added, “We are clearly seeing that housing and remodeling has its own momentum and was less impacted by the sequester than originally feared. We should see continued momentum in remodeling each quarter for the next several years as home prices rise, home sales recover, consumer confidence improves, and the volume of investor activity begins to peak.”
Metrostudy produces the RRI to provide the industry visibility into local market remodeling activity, potential future activity, and potential demand. According to the company’s first quarter report, there are 331 out of 366 Metropolitan Statistical Areas with forecasted growth in project activity for 2013, with the average growth in activity in these recovering markets of 3%.
Metrostudy ranks the best markets for remodeling based on market health, level of activity, extent of recovery, and potential demand. The current top ten best markets for remodeling are Buffalo, San Antonio, Houston, Dallas, Austin, Pittsburgh, Oklahoma City, Denver, Charlotte, and Indianapolis. The largest remodeling markets based on forecasted projects in 2013 are New York, Los Angeles, Chicago, Dallas, Washington, Philadelphia, Houston, Boston, San Francisco, and Atlanta.
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 addition, Metrostudy also produces annual estimates of project counts and expenditures as well as forecasts of the quarterly RRI and annual projects and expenditures.
Metrostudy, a Hanley Wood company, is the largest provider of comprehensive research and insight for the real estate industry. Builders, developers, banks, manufacturers, retailers and many other industries all rely on Metrostudy's data and analytics to support strategic business decisions at the local, regional and national market level. www.Metrostudy.com
About Hanley Wood
Hanley Wood, LLC is the premier media, event, information and strategic marketing services company serving the residential, commercial design and construction industries. Through its operating platforms, the company produces award-winning digital and print publications, newsletters, websites, marquee trade shows and events, market intelligence data and strategic marketing solutions. The company also is North America's leading publisher of home plans.