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The National Association of Home Builders' (NAHB) Remodeling Market Index (RMI) reported a drop to 41.7 in the third quarter from 43.9 in the second quarter, after posting a four-year high of 46.5 in the first quarter. An RMI below 50 indicates that more remodelers report that market activity is declining than report that it is increasing.
"Remodelers report that while many consumers show interest in having remodeling work done, they are slow to commit to projects,” said NAHB Remodelers chairman Bob Peterso, a remodeler from Ft. Collins, Colo. “Consumers are in a ‘wait and see’ mode with regard to current economic conditions."
The RMI component measuring current market conditions fell to 43.0 from 44.8 in the previous quarter. The RMI component measuring future indicators of remodeling business declined to 40.4 from 43.0 in the last quarter.
All three components measuring current market conditions decreased: major additions to 45.2 (from 46.2 in the second quarter), minor additions to 45.7 (from 48.5) and maintenance and repair to 37.1 (from 38.4). Future market indicators decreased: calls for bids to 45.4 (from 49.8), amount of work committed for the next three months to 29.9 (from 32.3), backlog of remodeling jobs to 43.0 (from 45.7) and appointments for appraisals to 43.3 (from 44.2).
Regionally, current remodeling market conditions shrank in the Northeast to 43.9 (from 48.1 in the second quarter) and the West to 40.9 (from 48.2). Increases were noted in the Midwest at 46.8 (from 44.4) and the South at 47.1 (from 42.9). Future market indicators fell in all regions, except for the South, where it increased to 42.2 from 41.6 in the second quarter.
“The current economic instability continues to affect consumer confidence, therefore we have seen a drop off in remodeling activity for the last two quarters,” said NAHB chief economist David Crowe. “In order for the remodeling market to pick up, homeowners need to have access to less restrictive lending requirements and see their economic future stabilizing.”