According to the Remodeling Market Index (RMI) produced by the National Association of Home Builders (NAHB), an increase in remodeling activity has increased the index from 41.5 in the last quarter of 2010 to 46.5 in the first quarter of 2011. This is the highest reading in the index since the fourth quarter of 2006.
The index is compiled by responses from remodeling companies. The index is drawing close to 50.0 which is the point at which more companies report positive growth in the latest quarter compared to the previous. Although the NAHB reports that many homeowners are slower to commit to home improvement projects, the number of requests for appointments and estimates is steadily increasing.
"Home remodeling continues to slowly increase and continued growth through the year is expected." said NAHB Chief Economist David Crowe. "The fact that some indicators are breaking 50 means remodelers are seeing improving activity in their markets. While credit scarcity and economic uncertainty continue to weigh down remodeling, signs of increasing consumer interest are promising."
All current remodeling market indicators increased: major additions to 50.3 (from 48.6 in the fourth quarter), minor additions to 48.0 (from 43.9), and maintenance and repair to 39.5 (from 37.0). Future market indicators also improved across the board: calls for bids rose to 53.1 (from 47.2), appointments for proposals to 52.4 (from 43.1), backlog of remodeling jobs to 49.7 (from 42.6), and amount of work committed for the next three months to 32.1 (from 25.9).
The index also reported on the most common reasons that remodelers here in why customers hold back from proceeding with projects. The majority of respondents reported economic issues, such as difficulty getting financing (90%), reduced equity in homes (81%) and uncertain feelings towards their ongoing financial health (74%). Additional concerns related to the valuation of the home with 67% reporting reluctance to invest in a home that won't hold its value and another 54% who felt that inaccurate appraisals hindered their ability to get financing for projects.