NAHB: Remodeling Market Sentiment Improves in Q4 2024

The NAHB/Westlake Royal Remodeling Market Index (RMI) registered a reading of 68 in the fourth quarter of 2024, up five points from the previous quarter.

Remodelers are more enthusiastic about the market than they were earlier this year, as seen by NAHB’s recent review of home renovation loan applications.

Demand in many parts of the country was higher than typical for the fall season, particularly for larger projects, with leads flowing in after the uncertainty around the November elections was resolved.

Not only did the current conditions index for $50,000-plus projects rise the most throughout the quarter, but the proportion of remodelers performing full house remodeling hit a new high of 62%.

The RMI is based on a poll in which remodelers rank several characteristics of the residential remodeling industry as “good”, “fair”, or “poor.” Responses to each question are transformed into an index ranging from 0 to 100.

An index number greater than 50 suggests that a greater proportion of respondents believe conditions are excellent rather than bad.

Current Conditions

The Remodeling Market Index (RMI) averages two key component indices: the Current Conditions Index and the Future Indicators Index.

The present Conditions Index is an average of three subcomponents: the present market for big renovation projects ($50,000 or more), medium-sized projects ($20,000 to $49,999), and small projects (less than $20,000).

During the fourth quarter of 2024, the Current Conditions Index averaged 75, up three points from the previous quarter.

All three components remained in positive territory, with big remodeling projects up eight points to 75, moderate remodeling projects up two points to 73, and small remodeling projects down one point to 76.

Future Indicators

The Future Indicators Index is calculated as the average of two subcomponents: the present rate of lead and inquiry generation and the existing backlog of renovation projects.

In the fourth quarter of 2024, the Future Indicators Index was 61, up six points over the previous quarter.

The component that measures the current pace of lead and inquiry generation increased by nine points to 62.

Meanwhile, the component measured in the backlog of remodeling jobs increased two points to 59 quarter on quarter.

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