Remodeling Activity Continues To Expand, Boosted By Home Sales
WASHINGTON, D.C. (November 13, 2015) — Metrostudy, a Hanley Wood company, announced today the release of its third quarter 2015 Residential Remodeling Index (RRI) detailing activity in the remodeling and replacement industry.
Growth in U.S. remodeling activity remained steadfast in third quarter 2015 with the national RRI Activity Index posting a 5.8 percent increase year-over-year to a reading of 102.1. The index has now seen fourteen consecutive quarters of year-over-year gains since 2011, when remodeling activity bottomed out. Third quarter’s index met previous expectations and continued the positive momentum from second quarter, when the index surpassed the 100.0 mark for the first time since 2007, which was the peak of remodeling activity last decade.
In terms of quarterly gains, third quarter’s national RRI grew 1.3 percent from second quarter, and represents fifteen consecutive quarterly increases. Our near term forecast for the national RRI remains mostly unchanged from our second quarter release, with steady expansion expected over the next few years due to numerous variables that favor the remodeling and replacement industry.
“Third quarter’s RRI highlighted the housing market conditions and economic fundamentals that are supporting remodeling across the country. Activity is being driven by existing home sales that surged more than expected in September and stand at their second-highest annual rate since February 2007. Job growth came in lower than expected in August and September, but saw a large rebound in October with some wage growth as well,” says Brad Hunter, Chief Economist at Metrostudy. “Longer term, the remodeling industry stands to benefit from the aging U.S. housing stock and the need to upgrade old homes, something that will only be compounded by the low level of new home construction that has persisted since the Great Recession. The largest headwind for the industry is a shortage of skilled trade workers, which could temper growth and increase costs.”
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 third quarter report, 340 out of 381 Metropolitan Statistical Areas are expected to see year-over-year growth in remodeling and replacement projects in 2015, with average growth of 3.6 percent.
For more information on accessing the full quarterly report, please email RRI@hanleywood.com.
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.
Metrostudy is the leading provider of primary and secondary market information to the housing and residential construction industry. Metrostudy’s actionable business intelligence informs investment decisions that mitigate risk and grow revenue for builders, developers, lenders, suppliers, retailers and manufacturers. It’s the construction industry’s only integrated data intelligence solution supported by the most extensive U.S. geographic coverage. Learn more at Metrostudy.com.
About Hanley Wood
Hanley Wood is the premier company serving the information, media, and marketing needs of the residential, commercial design and construction industry. Utilizing the largest analytics-and editorially-driven Construction Industry Database, the company provides business intelligence and data driven services. The company produces award-winning media, both digital and print, high-profile executive events, and strategic marketing solutions. To learn more, visit hanleywood.com.