Remodeling Market Sentiment Drops in First Quarter

Remodeler sentiment fell in the first quarter of 2025, mirroring a trend seen last month in single-family house builder sentiment.

The NAHB/Westlake Royal Remodeling Market Index (RMI) recorded a reading of 63 in the first quarter, down five points from the previous quarter.

While this score remains encouraging, it is only the second time since the first quarter of 2020 that the RMI has dropped to 63.

Tariffs and economic uncertainties were top of mind among consumers this quarter.

Although practically all of the data for the first quarter RMI were obtained prior to the implementation of particular reciprocal tariffs, the tariff debate and uncertainties have had an impact on consumer confidence.

Furthermore, remodelers who responded to the RMI survey’s special questions revealed that their suppliers had already raised prices by an average of 6.9% since January 20, citing the anticipated impact of tariffs.

Nonetheless, strong tailwind variables such as an aging population, aging house stock, post-COVID home equity gains, and “locked-in” (definition) existing homeowners will keep renovation spending stable for the foreseeable future, according to the NAHB estimate.

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).

In the first quarter of 2025, the Current Conditions Index averaged 71, four points lower than the previous quarter.

While the component measuring small-sized projects stayed steady at 76, moderately-sized remodeling projects dropped one point to 72, and major remodeling projects declined 11 points to 64.

However, all three components remained positive, with values above 50.

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 first quarter of 2025, the Future Indicators Index averaged 55, six points lower than the previous quarter.

Both subcomponents declined quarter after quarter, with the component measuring the backlog of remodeling jobs dropping one point to 58 and the component reflecting the present rate at which leads and inquiries are coming in falling 11 points to 51.

Please visit NAHB’s RMI web page to view the entire set of RMI tables, including regional indices and a comprehensive history for each RMI component.

[Read more about this story on Eyeonhousing.org]