Remodeling Market Sentiment Improves in the Fourth Quarter of 2024
The National Association of Home Builders (NAHB) released its NAHB/Westlake Royal Remodeling Market Index (RMI) for the fourth quarter, posting a reading of 68, up five points compared to the previous quarter.
The NAHB/Westlake Royal RMI survey asks remodelers to rate five components of the remodeling market as “good,” “fair” or “poor.” Each question is measured 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 results of the RMI are seasonally adjusted.
The Current Conditions Index is an average of three components: the current market for large remodeling projects, moderately-sized projects and small projects. The Future Indicators Index is an average of two components: the current rate at which leads and inquiries are coming in and the current backlog of remodeling projects. The overall RMI is calculated by averaging the Current Conditions Index and the Future Indicators Index. Any number over 50 indicates that more remodelers view remodeling market conditions as good than poor.
“Remodelers are more optimistic about the market than they were earlier in the year,” said NAHB Remodelers Chair Mike Pressgrove, a remodeler from Topeka, Kan. “Demand in many parts of the country was stronger than usual for the fall season, especially demand for larger projects, with leads coming in after the uncertainty about the November elections was removed.”
“The increase in the 4th quarter RMI was driven to a great degree by demand for large projects,” said NAHB Chief Economist Robert Dietz. “Not only did the current conditions index for $50,000-plus projects show the greatest increase during the quarter, but the share of remodelers doing whole house remodeling reached a record high of 62%. This has significant implications for supply chains because large remodeling projects are more likely to use building products purchased directly from the manufacturer, or a manufacturer’s distribution center, rather than a retail outlet.”
The Current Conditions Index averaged 75, increasing three points compared to the previous quarter. All three components remained well above 50 in positive territory: the component measuring large remodeling projects ($50,000 or more) rose eight points 75, the component measuring moderate remodeling projects (at least $20,000 but less than $50,000) increased two points to 73, and the component measuring small-sized remodeling projects (under $20,000) inched down one point to 76.
The Future Indicators Index averaged 61, up six points compared to the previous quarter. The component measuring the current rate at which leads and inquiries are coming in jumped nine points to 62, and the component measuring the backlog of remodeling jobs rose two points to 59.
For the full RMI tables, please visit nahb.org/rmi.