Quarterly decline suggests some weakness in the market
Most remodelers in the US remain optimistic about the market, according to the National Association of Home Builders (NAHB). However, a growing number are starting to experience symptoms of a slowdown.
NAHB’s Current Conditions Index – which gauges the current market for large remodeling, moderately-sized, and small projects – fell eight points to an average of 83 in the second quarter.
“Some customers are showing a reluctance to go forward with projects due to the higher costs and delays associated with material shortages, as well as higher interest rates,” said NAHB Remodelers chair Kurt Clason.
Read more: Lumber prices – what impact are they having on remodeling?
Broken down by its components, large remodeling projects ($50,000 or more) declined 11 points to 79, the component measuring moderately-sized remodeling projects (at least $20,000 but less than $50,000) was down seven points to 84, and the component measuring small remodeling projects (under $20,000) dipped six points to 86.
The Future Indicators Index also posted a decline in Q2, down 11 points to 72 from a year ago. The component measuring the current rate at which leads and inquiries are coming in slumped 13 points to 68, and the component measuring the backlog of remodeling jobs plunged 10 points to 76.
“The RMI remains firmly in positive territory above 50 but has declined on a year-over-year basis, particularly the RMI component for large remodeling projects over $50,000,” said NAHB chief economist Robert Dietz. “This suggests some weakness in the market and is consistent with NAHB’s projection that residential remodeling spending, like new residential construction, will be down in 2022. However, NAHB’s forecast continues to have remodeling outperforming single-family construction in 2022 and 2023 in terms of growth rates.”
