The Remodeling Market Index of the National Association of Home Builders increased four points in the third quarter, compared to the second quarter, to a reading of 57. The NAHB said the RMI is now at a level seen consistently in 2015.
An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than the opposite. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.
The RMI's current market conditions index rose to 56, up two points from the previous quarter. Indicating optimism in market strength, the RMI's future market indicators increased five points from the previous quarter to 58.
"Remodelers nationwide are seeing increased demand for major and minor addition jobs and calls for bids, leading to an increase in both current and future market indicators," said Tim Shigley, NAHB remodelers chairman. "However, ongoing labor shortages continue to challenge their ability to meet the increased demand."
"The Remodeling Market Index is consistent with NAHB's forecast of gradual and steady improvements in residential remodeling activity," said Robert Dietz, chief economist for the NAHB. "This segment of our industry is being supported by rising home values and steady consumer confidence."
Remodeling Expenditures Forecast To Peak in 2017
Spending on home remodeling projects are forecast to reach a new high next year before retreating, according to the Leading Indicator of Remodeling Activity (LIRA) of the Joint Center for Housing Studies at Harvard University.
LIRA shows that the amount of money homeowners spent on improvements and repairs rose 6.6 percent in the four-month period ending in September, compared with the same time frame of a year ago.
Spending on remodeling projects will accelerate until it reaches 8.3 percent in the second quarter of 2017, according to the forecast. Then it will ease back.
The amount of money spent on such expenses will continue to rise through the third quarter of 2017, but at a slower pace, the Joint Center for Housing Studies said.
"Homeowners are spending more on remodeling in part because many are benefiting from recovering home prices that leave them with more equity to tap," Harvard University said. "Earlier in the year, data provider RealtyTrac noted that Americans were opening more, and bigger, home equity lines of credit."