Remodeling Activity Sluggish, Smaller Jobs on Rise

Washington, DC, Aug. 12, 2008 -Residential Remodeling activity remained sluggish during the second quarter, according to the National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI).

The current market conditions indicator rested at 41.8, the same level as the first quarter, while the future expectations measure rose slightly to 38 from 37.9 in the previous quarter.
 
The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number over 50 indicates that the majority of remodelers view market conditions as improving. The RMI has been running below 50 since the final quarter of 2005, implying shrinkage of remodeling expenditures since that time.
 
“Remodelers are experiencing slower activity in markets nationwide, particularly for major improvements to owner-occupied housing” said NAHB Remodelers Chairman Lonny Rutherford, a remodeler from Farmington, N. M.

“While markets remain pretty active, most remodelers are taking on a greater number of smaller jobs to maintain their businesses.”
 
The index shows a gradual decline in overall remodeling activity since 2005. Nationally, major additions and alterations declined slightly to 43.18 (from 44.15) during the second quarter, while minor additions and alterations increased slightly to 42.89 (from 41.57). Maintenance and repair declined to 39.06 (from 39.68)
 
“As in previous economic downturns, remodeling activity is proving to be cyclical rather than countercyclical, although the degree of decline pales in comparison to the setbacks registered in the new-home market, said NAHB Chief Economist David Seiders.

“We expect remodeling to remain generally flat in 2009 followed by strong growth due to home maintenance needs.”
 
Eighty-four percent of surveyed remodelers also reported home builders diversifying into remodeling due to the downturn in home building, thus contributing to more saturated remodeling market conditions.
 
A