Home remodeling activity crept up in the third quarter after sinking to its lowest level in four years in the second quarter, according to an index report released today by the National Association of Home Builders.
The Remodeling Market Index measures remodeler perceptions of market demand for current and future residential remodeling projects.
The index for current market conditions increased from 44.8 in the second quarter to 46.2 in the third quarter, but was down compared to an index score of 47.8 in third-quarter 2006.
An index score of less than 50 indicates that most remodelers view market conditions as declining, while a score greater than 50 indicates that most view market conditions as improving.
The third-quarter index score for current market conditions was the lowest for that quarter since third-quarter 2001.
The index score for future remodeling expectations declined in the third quarter to 43.3 compared to 44.1 in the second quarter and 45.4 in third-quarter 2006. It was the lowest third-quarter index score since third-quarter 2001, when it stood at 42.2.
Mike Nagel, remodelers chairman for the home builders’ group, said in a statement, “Though down a bit from the previous quarter, the remodeling market is not experiencing the dip in production and sales being seen by the new home building sector of the industry.”
Nationally, the index score for major additions and alterations of $25,000 or more in the current market was 46.9 in the third quarter, down from a score of 51 in third-quarter 2006 but up slightly from 46.4 in second-quarter 2007.
The index for minor additions and alterations of less than $25,000 in the current market dropped to 47.1 in the third quarter compared to 47.3 in third-quarter 2006, but rose from 44.7 in second-quarter 2007.
And the index score for maintenance and repairs was 44.3 in the third quarter, down from 45.4 in third-quarter 2006 and roughly even with the second-quarter 2007 score.
The index score for the amount of remodeling work committed for the next three months dropped from 37.4 in third-quarter 2006 to 36.1 in third-quarter 2007, and was up from 35.9 in second-quarter 2007.
Calls for bids had an index score of 46.5 in the third quarter, compared to 48.2 in third-quarter 2006 and 46.7 in second-quarter 2007. The index score gauging backlog of remodeling jobs dropped from 50.3 in third-quarter 2006 to 44.7 in third-quarter 2007, and was also down from 47.3 in second-quarter 2007.
Appointments for proposals had an index score of 45.7 in the third quarter, down slightly from 45.8 in third-quarter 2007 and 46.6 in second-quarter 2007.
A “special questions” section in the latest survey asked remodelers about outdoor remodeling jobs.
About 52 percent of respondents said that the addition of a deck was the most common type of outdoor remodeling job completed by the company, followed by: front porch, 25 percent; decking/patio covers/enclosures, 22 percent; outdoor lighting, 13 percent; and outdoor kitchen, 13 percent. The U.S. Census reported that $2.5 billion was spent last year on decks.
About 31 percent of respondents reported an increase in outdoor remodeling work compared to the previous year, and 44 percent responded that outdoor remodeling work had increased during the last five years, the builders’ group reported.
A separate report released this week by Hanley Wood LLC in cooperation with the National Association of Realtors trade group’s Realtor Magazine found that upscale siding replacement on homes recouped 88 percent of costs at resale, while wood deck additions returned about 85 percent of costs and wood window replacements returned about 81 percent of costs upon a sale. A minor kitchen remodel returned 83 percent of project costs at resale, the study also found.
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