Remodeling Industry at Highest Point Since 2011
The first-quarter results of the 2015 Residential Remodeling Index, which examines activity in the remodeling and replacement industries, showed a 4% year-over-year increase, Metrostudy announced in late May. That’s the strongest gain since the first quarter of 2014, when the RRI went up by 5.3%.
“The Residential Remodeling Index strengthened in first quarter 2015, fending off any kind of seasonal dip to remain in a period of steady expansion. Remodeling activity in the U.S. continues to benefit from healthy job gains, increased consumer sentiment, and better household formation numbers,” Brad Hunter, chief economist at Metrostudy, said in a news release.
Metrostudy, which is a Hanley Wood company, predicts that the remodeling market will completely recover from its lowest point (reached at the end of 2011) by the third quarter of 2015. That would take a reading of 100.0 or higher; the reading for the first quarter of 2015 was 98.6. The latest reading also represents the 13th consecutive quarter of gains.
Out of the 381 Metropolitan Statistical Areas considered by the RRI report, 380 are expected to see growth in 2015. That growth should average around 5%.
Remodeling is intimately tied into economic factors such as the job and housing markets. More and more Americans are feeling comfortable remodeling as job gains in April eased fears that the economy is slowing down again, according to the Metrostudy team. There’s still some hesitation, however, because of a lack of wage growth.
Sales of existing homes often lead to more remodeling as well, as similar recent reports have noted, both because homebuyers want to customize their new purchases and because sellers often remodel certain parts of homes (kitchens and bathrooms, for example) hoping to get higher offers. Of course, not all remodeling decisions are linked to resale value; one 2013 survey found that the vast majority (79%) of respondents were remodeling their kitchens simply to “improve their look and feel.”
And Hunter noted that the group that’s spending the most on remodeling right now is actually comprised of older homeowners modifying their homes so they can age in place. “Remodeling and replacement activity is high right now for those with fatter wallets, mainly baby-boomers and mature families,” he added.