The NAHB/Westlake Royal Remodeling Market Index (RMI) for the second quarter of 2023 posted a reading of 68, edging down 2 points from the first quarter of 2023.
Even though the Fed has maintained a hawkish position when it comes to interest rates as inflation continues to moderate since it is still above their 2 percent target, the demand for remodeling is holding up despite higher borrowing costs and prices. The remodeling market is experiencing multiple tailwinds which is supporting this demand, including low inventory especially for existing homes, aging housing stock, increased prevalence for employees to work-from-home (WFH), and high levels of equity for existing homeowners. Even after the slight decrease, the RMI remains in positive territory and consistent with NAHB’s forecast that the remodeling sector will grow in 2023, albeit at a slower pace than in 2022.
The RMI is based on a survey that asks remodelers to rate various aspects of the residential remodeling market “good,” “fair” or “poor.” Responses from each question are converted to an index that lies on a scale from 0 to 100, where an index number above 50 indicates that a higher share view conditions as good than poor.
The RMI is an average of two major component indices: the Current Conditions Index and the Future Indicators Index. The Current Conditions Index is an average of three subcomponents: the current market for large remodeling projects ($50,000 or more), moderately-sized projects ($20,000 to $49,999), and small projects (under $20,000).
In the second quarter of 2023, the Current Conditions component index was 77, increasing 2 points from the first quarter of 2023. Quarter-over-Quarter, the two subcomponents decreased: large remodeling projects inched by 1 point to 72 and small projects increased 4 points to 81. As for moderately-sized remodeling projects, this subcomponent decreased 1 point at 77.
The Future Indicators Index is an average of two subcomponents: the current rate at which leads and inquiries are coming in and the current backlog of remodeling projects. In the second quarter of 2023, the Future Indicators Index was 60, which is 4 points lower than the first quarter of 2023. Quarter-over-quarter, the backlog of remodeling jobs remained unchanged at 59 while the current rate at which leads and inquiries dropped 8 points to 61.
For the full set of RMI tables, including regional indices and a complete history for each RMI component, please visit NAHB’s RMI web page.
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