The Remodeling Market Index (RMI) posted a reading of 57 in the third quarter of 2017, up two points from the previous quarter, according to the National Association of Home Builders (Figure 1). For 18 consecutive quarters, the RMI has been at or above 50, which indicates that more remodelers report market activity is higher than report it is lower (compared to the previous quarter).
The RMI is an average of two sub-indices, one that measures current market conditions and another that measures future remodeling activity. The current market conditions index increased one point to 56 in the third quarter or 2017 (Figure 2). Among its three components, major additions and alterations waned one point to 53, minor additions and alterations increased three points to 56, and the home maintenance and repair component rose one point to 58.
The future market indicators index rose three points to 58 in the third quarter (Figure 3). Calls for bids increased two points to 58, amount of work rose three points to 56, the backlog of remodeling jobs gained two points to 60 and appointments for proposals hiked four points to 59.
Although the RMI indicates a healthy remodeling market, remodelers face ongoing challenges. The third quarter survey included a set of special questions asking remodelers about the labor supply in 15 different trades, such as carpenters, framing crews, and electricians. Of the trades that have data history (12 trades), 66 percent of remodelers reported labor shortages in the third quarter of 2017, compared to 52 percent in the third quarter of 2016. The elevated cost of materials is also a challenge for remodelers going forward. Both of these issues are constraining remodelers’ ability to complete projects in a timely, cost-effective manner.