The Remodeling Market Index (RMI) rose to 50 in the third quarter of 2012, up from 45 in the previous quarter, according to the National Association of Home Builders (NAHB). The RMI is at its highest point since the third quarter of 2005.
The RMI component measuring current market conditions rose to 52 from 46 in the previous quarter, while the component measuring future indicators increased to 49 from 44.
An RMI above 50 indicates that more remodelers report market activity is higher (compared with the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future activity.
“The improvement in the RMI provides more evidence that the remodeling industry is making the orderly recovery from its low point in 2009 as we’ve been expecting,” said NAHB chief economist David Crowe. “Although remodeling projects over $25,000 are now showing some signs of strength, they are still lagging behind smaller property alterations and maintenance and repair jobs. The recovery of the remodeling market in general, and large projects in particular, continues to be constrained by factors such as tight credit and problematic appraisals.”
All three indicators of current market conditions improved: maintenance and repairs rose to 56 (from 50), minor additions and alterations to 51 (from 47) and major additions and alterations to 49 (from 42).
Future market indicators in every region but the Northeast rose from the previous quarter: Midwest, 50 (from 46); South, 52 (from 46); West, 52 (from 42); and Northeast, 38 (from 41).