Eye On Housing
The NAHB/Royal Building Products Remodeling Market Index (RMI) increased for the second quarter, posting a reading of 87, up 14 points from the second quarter of 2020. The increase in the index is a sign of improving remodelers’ confidence in their markets, for projects of all sizes.
The RMI is an average of two major component indices: the Current Conditions Index, and the Future Indicators Index. The Current Conditions Index, in turn, is an average of three subcomponents: the current market for large remodeling projects ($50,000 or more), moderately-sized projects ($20,000 to $49,999), and small projects (under $20,000).
In the second quarter, the Current Conditions Index was 91, a 14-point increase from the second quarter of 2020. All components also posted increases compared to the second quarter of last year: large remodeling projects ($50,000 or more) jumped 20 points to 90, moderately-sized remodeling projects (at least $20,000 but less than $50,000) increased 13 points to 91 and small remodeling projects (under $20,000) rose nine points to 92.
The Future Indicators Index is an average of two subcomponents: the current rate at which leads and inquiries are coming in and the current backlog of remodeling projects. In the second quarter, the future Indicators Index was 83, up 13 points from second quarter of 2020. Both components increased as well: the current rate at which leads and inquiries are coming in rose nine points to 81 and the backlog of remodeling jobs jumped 19 points to 86.
There is not yet enough history to seasonally adjust the current version of the RMI. For that reason, results cannot be meaningfully compared to the previous quarter. To track quarterly trends, the survey asks remodelers to compare market conditions to three months earlier, using a ‘better,’ ‘about the same,’ ‘worse’ scale. In the second quarter, 30 percent of respondents indicated that the market is ‘better’ and only 9 percent rated it ‘worse’ than the first quarter of 2021.
As the market attempts to balance the number of households that want homes and the number of homes available, the value of homes is rising, helping to fuel demand for remodeling. This has been sufficient to keep remodelers optimistic, despite the significant headwinds of labor and material shortages. And while there has been some easing of framing lumber prices, prices for other materials like OSB remain very high. In fact, the price of OSB is up more than 500 percent since the start of 2020.
For the full RMI tables, please visit NAHB’s RMI web page.
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