Remodeling Market Sentiment Softens in Third Quarter

The NAHB/Westlake Royal Remodeling Market Index (RMI) for the third quarter of 2024 registered 63, a two-point decrease from the previous quarter.

Remodelers are positive about the market, despite the fact that overall RMI fell for the third quarter in a row.

Some potential customers are citing the impending election as a justification for putting significant projects on hold.

Remodelers continue to encounter a variety of challenges, including difficulty sourcing experienced construction labor and rising mortgage rates.

Nonetheless, the overall RMI score of 63 is consistent with the NAHB’s prediction of a constant 2% increase in remodeling investment over the next two years.

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) is the average of two primary indices: the Current Conditions Index and the Future Indicators Index.

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

In the third quarter of 2024, the Current Conditions Index averaged 72 points, down one point from the previous quarter.

All three components remained well above 50 in positive territory: the component measuring small-sized remodeling projects (under $20,000) increased by two points to 77, while the components measuring moderate remodeling projects (at least $20,000 but less than $50,000) and large remodeling projects ($50,000 or more) decreased by three points to 71 and 67, respectively.

Future Indicators

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

In the third quarter of 2024, the Future Indicators Index was 55, down three points from the previous period.

Quarterly, the component measuring the backlog of remodeling jobs fell three points to 57, while the component reflecting the present rate of lead and inquiry generation fell two points to 53.

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