"In some areas, a growing number are seeing signs of a slowdown"
Remodeling market sentiment declined in the third quarter, according to the National Association of Home Builders (NAHB).
While it remains positive in many parts of the country, NAHB’s Remodeling Market Index (RMI) fell to a reading of 77 in Q3 2022, down 10 points from Q3 2021. The report also revealed that 23% of remodelers said the market had worsened in the third quarter of 2022, compared to only 10% who said it had improved.
“Home equity and ongoing strong demand for work at home and an aging housing stock are supporting demand for remodeling,” said NAHB chief economist Robert Dietz. “Interest rates are having a negative effect, more so on new construction than remodeling, so it’s not surprising that remodeler sentiment has so far managed to stay positive.”
The Current Conditions Index decreased eight points year over year to an average of 82 points. All of its three components declined as well: the component measuring large remodeling projects ($50,000 or more) was down six points to 80, the component measuring moderately-sized remodeling projects (at least $20,000 but less than $50,000) posted an eight-point drop to 83, and the component measuring small remodeling projects (under $20,000) slipped six points to 85.
Read next: Record multifamily rent growth hit brakes amid economic slowdown
The Future Indicators Index registered a 13-point decline to 71 in the third quarter. The component measuring the current rate at which leads and inquiries are coming in dropped 17 points to 66, and the component measuring the backlog of remodeling jobs decreased by eight points to 77.
“In some areas, however, a growing number are seeing signs of a slowdown due to the ongoing problems of labor shortages, high material prices and rising interest rates,” said NAHB Remodelers chair Kurt Clason.
“After a decline in 2022, NAHB expects a small increase in remodeling activity in 2023, in contrast to the rate of new construction, which we anticipate will continue to decline,” Dietz said.