The NAHB/Royal Building Products Remodeling Market Index (RMI) for the third quarter posted a reading of 87, up five points from the third quarter of 2020. The reading is a sign of positive residential remodeler sentiment for projects of all sizes.
The RMI is based on a survey that asks remodelers to rate various aspects of the remodeling market “good,” “fair” or “poor.” Responses from each question are converted to an index that lies on a scale from 0 to 100, where an index number above 50 indicates that a higher share view conditions as good than poor.
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 third quarter of 2021, the Current Conditions Index was 90, a four-point increase from the third quarter of 2020. All subcomponents also posted increases compared to the third quarter of last year: large remodeling projects rose six points to 86, moderately-sized remodeling projects increased five points to 91 and small remodeling projects inched up one point to 91.
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 third quarter, the Future Indicator Index was 84, up seven points from third quarter of 2020. Both subcomponents increased as well: the current rate at which leads and inquiries are coming in rose five points to 83 and the backlog of remodeling jobs climbed eight points to 85.
There is strong demand and continued optimism in the residential remodeling market, despite the fact that supply constraints are severe and widespread. For example, well over 90% of remodelers in the third quarter RMI survey reported a shortage of carpenters. And 57% of remodelers reported having slightly raised prices for projects over the last six months, with another 28% indicating a significant increase in price, due in part to higher material costs and ongoing strong demand. Half of these remodelers reported some pricing out of demand due to higher prices for remodeling projects.
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 third quarter, 78 percent of respondents said that the current market was “about the same” as it was three months earlier.
For the full set of RMI tables, including regional indices and a complete history for each RMI component, please visit NAHB’s RMI web page.