The Remodeling Market Index (RMI) increased three points to 60 in the fourth quarter of 2017, according to the National Association of Home Builders (NAHB). This quarter marks the second time in the RMI’s history (dating back to 2001) in which the index reached 60 (Figure 1).
For 19 consecutive quarters, the RMI has been at or above 50, which indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. 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 sub-index increased four points to 60 in the fourth quarter of 2017. Among its components, major additions and alterations jumped seven points to 60, minor additions and alterations increased three points to 59, and the home maintenance and repair component rose three points to 61 (Figure 2).
The future market indicators sub-index rose one point to 59 in the fourth quarter of 2017. The backlog of remodeling jobs gained six points to 66 and the amount of work committed for the next three months increased two points to 58. Meanwhile, appointments for proposals and calls for bids both dropped two points to 57 and 56, respectively (Figure 3).
The fourth quarter RMI reading is consistent with recent growth in improvement spending. However, the jump in the backlog of remodeling jobs sub-index serves as an indication that remodelers still face significant supply-side challenges, such as the lack of skilled labor and high material prices.