Remodeling and Replacement Activity Starts 2014 Weaker Than Expected But Forecast Remains Strong
WASHINGTON, D.C. (May 9, 2014) — Following its best year since 2008, the residential remodeling and replacement industry experienced a slightly weaker start to 2014 than originally forecasted according to 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 95.2, which was a 0.7 percent improvement over the revised fourth quarter result of 94.5.
Year-over-year, the index gained 6.6 percent, marking the ninth consecutive quarterly improvement since the market bottomed at the end of 2011.
“The first quarter was only slightly weaker than forecasted amidst strong housing market fundamentals, better consumer confidence, and improving economic conditions,” remarked Jonathan Smoke, Chief Economist of Hanley Wood. “We are hearing from remodelers and contractors all across the country that the weather did impact their ability to execute from job site issues to labor and material delays. With the winter now behind us and our forecast remaining strong for 2014, we expect to see the pace of growth improve throughout the year. Remodelers remain quite confident about their business based on our April survey of remodelers and replacement contractors. On a national basis, the quality and volume of their job backlog is high and the corresponding quality and volume of leads and inquiries is even higher.”
Metrostudy produces the RRI to provide the industry visibility into local market remodeling activity, forecasted future activity, and potential demand. According to the company’s fourth quarter report, 360 out of 381 Metropolitan Statistical Areas should see year-over-year growth in remodeling and replacement projects in 2014, with markets averaging growth of 5 percent.
About the Residential Remodeling Index
The RRI is a quarterly measure of the level of remodeling activity in 381 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 $1000. 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 381 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.