WASHINGTON, D.C. (August 8, 2013) — Remodeling and replacement project activity was stronger in the first half of 2013 than previously forecasted, based on the latest release of the Residential Remodeling Index (RRI) by Metrostudy, a Hanley Wood company. The seasonally adjusted second quarter national composite of the RRI registered a score of 89.1, which was a 1.6 percent improvement over the upwardly revised first quarter result of 87.6.
The increase quarter-to-quarter was the sixth solid consecutive increase after the industry experienced declines in 2011 and reached the bottom of declines since peaking in 2007. As housing fundamentals began turning the corner in 2012, remodeling and replacement began to increase but this year the gains are far more substantial due to improving underlying demand. Metrostudy is forecasting the market to continue to improve at a strong pace over the next several years.
“The year started stronger than we previously estimated once we received a full set of remodeling permit data and could also factor in home sale activity,” remarked Jonathan Smoke, Chief Economist of Hanley Wood. “And with our first read of activity in the second quarter of this year, we are seeing improvements in the remodeling market that should lead to this year being the best year for growth since 2005.”
Smoke added, “The quarterly RRI index values and forecast as well as our annual project estimates reinforce where we are in the recovery, which is solidly in the second year of a multi-year expansion period. In addition to high levels of home sales, rising home prices, and strengthening consumer confidence, we are seeing the investor share of existing home sales decline, and that’s a key part of the reason that remodeling activity is much higher this year than last year.”
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 first quarter report, there are 364 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 6%.
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 Charlotte, Buffalo, San Antonio, Houston, Dallas, Austin, Raleigh, Pittsburgh, Rochester (NY), and Oklahoma City. 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.