Confidence in the remodeling industry rose to its highest level in five years, according to the National Association of Home Builders' (NAHB) Remodeling Market Index (RMI) for the fourth quarter of 2011, which was released Thursday. The RMI increased to 46.6 in the latest quarter from 41.7 in the third quarter.
In the fourth quarter, the RMI component measuring current market conditions rose to 48.4 from 43.0 in the previous quarter; this change reflected improved conditions in all four regions of the U.S. The RMI component measuring future indicators of remodeling business was also positive, increasing to 44.8 from 40.4 in the previous quarter and also marking improvements in all regions.
"As more consumers remain in their homes rather than move in this economy, remodelers benefited from a gradual increase in home improvement activity, taking us to a five-year high," said NAHB Remodelers Chairman Bob Peterson. "2011 ended on a strong note for the remodeling industry."
"With several key components above 50, the latest RMI provides reason for guarded optimism going forward," said NAHB Chief Economist David Crowe. "The residential remodeling market has been improving gradually, mirroring the trend in other segments of the housing market. Stringent lending requirements and economic uncertainty continue to be a drag on demand, but we expect a modest growth in remodeling activity to continue throughout 2012."
An RMI below 50 indicates that more remodelers report market activity is lower (compared to the prior quarter) than report it is higher. The overall RMI averages ratings of current remodeling activity with indicators of future activity.
