The NAHB/Westlake Royal Remodeling Market Index (RMI) for the second quarter of 2022 posted a reading of 77, declining 10 points from the second quarter of 2021. This is the largest year-over-year decrease since the survey was redesigned in Q1 2020.
The RMI is based on a survey that asks remodelers to rate various aspects of the residential 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 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 of 2022, the Current Conditions component index was 83, falling 8 points compared to the second quarter of 2021. Year-over-year, the subcomponent measuring large remodeling projects experienced the largest decline (-11 points) to 79, compared to the subcomponent measuring moderately-sized remodeling projects falling 7 points to 84 and the subcomponent measuring small remodeling projects slipping by 6 points to 86.
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 of 2022, the Future Indicators Index was 72, which fell 11 points from the second quarter of 2021. Year-over-year, the subcomponent measuring the current rate at which leads and inquiries are coming in declined 13 points to 68, which was the largest decline among all subcomponents. The subcomponent measuring the backlog of remodeling jobs decreased 10 points to 76.
The NAHB/Westlake Royal RMI was redesigned in 2020 to ease respondent burden and improve its ability to interpret and track industry trends. As a result, readings cannot be compared quarter to quarter until enough data are collected to seasonally adjust the series. To track quarterly trends, the redesigned RMI survey asks remodelers to compare market conditions to three months earlier, using a “better,” “about the same,” “worse” scale. In the second quarter of 2022, 11 percent of respondents said the remodeling market is “better” as it was three months earlier which was a 19 percentage points lower year-over-year. Respondents who indicated “worse” increased 12 percentage points to 21 percent and those who stated “about the same” rose 5 percentage points to 67 percent.
An overall RMI of 77 still indicates positive remodeler sentiment, but the decline suggests some weakness in the market which is consistent with NAHB’s projection that residential remodeling spending, like new residential construction, will be down in 2022. However, NAHB’s forecast continues to have remodeling outperforming single-family construction in 2022 and 2023 in terms of growth rates.
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.