Remodeling activity remained steady in the fourth quarter of 2006, according to the NAHB Remodeling Market Index (RMI). The current market conditions index edged up slightly from 47.8 to 48.2 on a seasonally adjusted basis and future expectations moved up to 46.0 from 45.4. The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects.

“Remodeling retained strength across most of the country compared to late last year,” said NAHB Remodelers Chairman Mike Nagel, CGR, CAPS, a remodeler from Chicago. “Regional economies and housing markets play an important role, and overall we see maintenance of high levels of remodeling activity and solid future prospects.”

The RMI indicated a strong increase in remodeling activity in the rental sector during the fourth quarter. The current conditions index for renter-occupied markets increased from 38.8 to 44.1, compared to a decline in current conditions in owner-occupied units from 51.4 to 49.7. Future expectations for renter-occupied units climbed from 37.1 to 42.4, and owner-occupied units edged up from 45.0 to 45.6.

“Though the substantial reductions in home sales and new housing production have impacted the remodeling market to some degree, we feel that remodeling of both owner-occupied and rental housing will remain strong compared to other areas of the industry,” said NAHB Chief Economist Dave Seiders. “With record levels of home owner equity and the constant need to upgrade the older housing stock, the remodeling outlook appears quite good for years to come.”

Regionally, the South reported the most growth, with current conditions rising to 52.8 and future expectations moving up to 51.1. Current conditions in the West grew to 52.4 but future expectations fell to 51.3. In the Northeast, current conditions moved down to 45.7 while future expectations increased to 50.1. Only the Midwest showed declines in both indexes, with current conditions decreasing to 44.4 and future expectations down to 35.7.

In response to special questions on the survey about subcontracting, participating remodelers reported that approximately one-third of their company’s work by dollar volume was subcontracted out. The median value for a general contractor’s subcontracted work in 2006 was $289,500 (with an average of $572,323), compared to a total median dollar volume of $848,214 for general contractors last year. Only 17% of remodelers surveyed reported acting as a subcontractor for other firms, and only 2% of the dollar receipts of all remodelers were dervied from subcontracting work. [ return to top ]