The level of remodeling and replacement project activity nationally remained steady in the first quarter of 2012, according to the latest release of the Residential Remodeling Index (RRI) by Hanley Wood. The seasonally adjusted first quarter national composite of the RRI registered a score of 82.34, which was a very slight decline of 0.04 percent over the revised fourth quarter result of 82.38.
Accompanying the new quarterly data, Hanley Wood also updated its remodeling forecast and expects to see growth overall in the U.S. in 2012 and more significant growth in large, improving markets.
The rate of remodeling and project activity across the U.S. fell 2.6 percent year-over-year in the first quarter, which was less than the year-over-year decline of 3.6% measured in the fourth quarter. The RRI indicates that remodeling and replacement activity hit a second bottom, with the volume of projects down 18% from the peak of activity which occurred in the first quarter of 2007.
Estimated remodeling and replacement projects for 2011 came in at just over 10 million, or a decline of 5 percent over the 10.5 million estimated projects completed in 2010. The 2010 volume of projects had shown a slight recovery over 2009, due in part to energy-related tax credits as well as a bump in home sales supported by tax credits that expired in 2010.
Remodeling and replacement activity suffered a decline in 2011 due to the move-forward of activity into 2010 as a result of the temporary tax credits as well as low consumer confidence in 2011 and weak housing conditions. The first quarter reading of the RRI indicates that 2012 started off on par with the end of 2011 on a seasonally adjusted basis. Hanley Wood Market Intelligence had expected a slight improvement in the first quarter, but still expects growth in the second quarter and throughout the remainder of 2012.
"Even though 2012 has started off slowly, we expect to see growth in the rate of remodeling and replacement activity throughout the rest of 2012 and into 2013," said Jonathan Smoke, the executive director of Hanley Wood Market Intelligence. "Housing and economic conditions are improving gradually in most markets in the country, which will spur greater activity in remodeling."
"Plus remodeling appears to have pent up demand for activity because of delayed projects during the last five years and because of significant demographic trends leading to the need to alter or improve millions of existing homes in the U.S.," Smoke added.
According to the new RRI data, the number of markets expected to see more remodeling projects in 2012 outnumber the number of markets expected to decline. 197 of 366 Metropolitan Statistical Areas are now expected to see more remodeling and replacement projects in 2012 than in 2011. The average forecasted increase in those improving markets is 4.1%. Some of the largest markets with expected growth in 2012 include Chicago, Atlanta, Minneapolis, Seattle, and Cleveland.
About the Residential Remodeling Index
The RRI is a quarterly measure of the level of remodeling activity in 366 metropolitan statistical areas (MSA) in the U.S., with the national composite reflecting the national level of activity. "Activity" includes home improvement and replacement projects, but does not include maintenance or projects of less than $500. The seasonally adjusted index shows the relative level of activity in the geography specified (MSA or national composite) compared to 2007 (the baseline year). A number above 100 indicates a level of remodeling activity higher than the level of activity at the beginning of 2007, which was the peak of remodeling activity in the prior decade.
The index is produced through a statistical model that leverages detailed data on remodeling activity, including household level remodeling permits, and consumer reported remodeling and replacement projects. Quarterly historical results for the national composite and for each of the 366 Metropolitan Statistical Areas in the U.S. are available back to 2004. In additional, Hanley Wood Market Intelligence also produces annual estimates of project counts and expenditures as well as forecasts of the quarterly RRI and annual projects and expenditures.
About Hanley Wood Market Intelligence
Hanley Wood Market Intelligence is the housing industry's leading provider of rich data and analytical services on residential real estate development and new-home construction. Through their proprietary Housing Intelligence database, Hanley Wood Market Intelligence delivers housing insights into more than 800 MSAs and 2300+ counties. http://www.HousingIntelligence.com
Hanley Wood, LLC, is the premier media and information company serving the housing and commercial design and construction industries. Through its operating platforms, the company produces award-winning magazines and Web sites, marquee trade shows and events, market intelligence data and custom marketing solutions. The company also is North America's leading publisher of home plans. http://www.hanleywood.com
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