Remodeling Activity Slows Slightly in Fourth Quarter

Remodeling activity slowed slightly in the fourth quarter of 2004 as the year ended with unusually wet weather, according to the NAHB Remodeling Market Index (RMI). Today’s fourth quarter results fell one point behind the seasonally adjusted third quarter of 2004.

“Although the RMI is seasonally adjusted, we still can’t always predict the weather,” said Remodelors Council Chairman Don Novak, CGR, CAPS, CGB, a remodeler from Cedar Rapids, Iowa. “The interest rates are still good, and remodelers are looking forward to a rebound in the spring.”

The RMI is derived from a quarterly national survey of 500 remodelers and is seasonally adjusted. The current market conditions index fell one point, from 51.8 last quarter to 50.7. The future expectations index moved ahead from 52.4 to 54.

Regionally, current market conditions in the South fell 1.8 points from last quarter to 52.9, and future expectations remained virtually unchanged at 57.9. The West was the only region to post gains in current market conditions, moving from 56.9 to 58.7. Conversely, the West also saw the biggest drop in future expectations, falling from 62.3 to 57.3. Once again, the Midwest posted a mixed bag as it showed a minor slowdown in current activity, dropping from 46.6 to 46.0, but saw the biggest rebound in future expectations, moving from 44.4 to 48.8. The Northeast saw the biggest fall for the second quarter in a row, with current activity dropping from 52.8 to 46.7 and future expectations fell from 56.3 to 53.8.

“Despite the slowdown in the fourth quarter of 2004, the market remains positive as future expectations continues to record growth,” said NAHB Chief Economist David Seiders. “Calls for bids and appointments for proposals are still coming in, leading us to expect a healthy 2005.”

The market virtually remained the same in terms of major additions and alterations, moving from 49.22 in the third quarter of 2004 to 49.88 in the fourth quarter. Minor additions and alterations slid 1.5 points to 50.15. The RMI’s maintenance and repairs component also slowed in the fourth quarter to 52.41 from 54.61 in the third quarter. Unlike other recent quarters, the strength of remodeling activity moved from an owner-occupied focus to the renter-occupied market. The biggest jump in the fourth quarter came in the form of appointments for proposals, which moved from 54.45 in the third quarter to 61.21, signaling a rebound in the spring.

For the first time, the RMI “special questions” section surveyed participants about their involvement in aging-in-place home modifications.

Sixty-one percent of respondents to the survey said their company was involved in home modification related to aging in place. About 71% of remodelers did aging-in-place work for homes headed by owners in the 55-64 years-old age group, and 62% did such work for clients over 65 years old. About 14% of remodelers stated that aging-in-place work requests have increased significantly over the past five years, and more than 60% reported seeing some increase.

When asked if they felt that consumers knew about the concept of aging in place, 69% of respondents said some of their clients know about it, but 25% said that customers still hadn’t heard of the concept. The most typical “aging-in-place” projects were installing grab bars and higher toilets and widening doorways. Other popular jobs were building ramps and installing curbless showers.

Of remodelers performing aging-in-place modifications, 23% said they have earned the Certified Aging-In-Place Specialist (CAPS) designation and another 28% said they plan on obtaining the designation in the near future.

About the RMI: The RMI is based on a quarterly survey of professional remodelers, whose answers to a series of questions were assigned numerical values to calculate two separate indexes. The first index gauges current market conditions and is based on remodelers’ reports of major and minor additions and alterations, plus maintenance work and repairs, on both owner- and renter-occupied dwellings. The second index gauges expectations for the near future and is based on remodelers’ reports of their calls for bids, amount of work committed for the next three months, job backlogs and appointments for proposals. A variety of “special questions” are also asked at the end of the survey to help pinpoint market trends.

If you would like to participate in the RMI, send your e-mail and mailing address information, along with telephone and fax numbers to the Remodelors Council. [return to top]