The Remodeling Market Index dropped six points to an index score of 49 in the first quarter of 2013, indicating remodelers’ confidence in the market dipped as well, according to the National Association of Home Builders.
Confidence was shaken largely due to concerns about the rising cost of construction materials and labor.
An RMI above 50 is an indicator that more remodelers report market activity is picking up rather than anemic.
"Remodelers remain optimistic about the outlook for growth in the remodeling market this year, but the rising cost of doing business makes it difficult to deliver the prices that many of our customers expect," said 2013 NAHB Remodelers Chairman Bill Shaw.
Shaw added, "Repairs and minor additions are currently the strongest categories of business for remodelers as home owners continue to invest in deferred maintenance and room-by-room remodeling."
The component of the RMI regarding future market indicators dropped from an index score of 56 in the previous quarter to 48. Current market conditions took a dip as well, falling from 54 in the previous quarter to 50. Activity was particularly strong in owner-occupied properties, according to remodelers, rating all categories of remodeling in owner-occupied homes 51 or better.
NAHB Chief Economist David Crowe noted that although this quarter's RMI indicates a pause in the remodeling market's upward momentum, it is the third highest reading for the RMI since the first quarter of 2006.
"Like the rest of the home building industry, remodelers are starting to feel squeezed by higher costs and limited availability of labor and materials, which is unusual at such an early stage of a housing recovery. However, the downturn was so deep and extended that this time it may take a while to re-establish the supply chains," said Crowe.