WASHINGTON, D.C. (June 2, 2016) — Metrostudy, a Hanley Wood company, announced today the release of its first quarter 2016 Residential Remodeling Index (RRI) detailing activity in the remodeling and replacement industry.
U.S. remodeling activity improved at the beginning of 2016. The national RRI Activity Index stood at a reading of 102.7 in first quarter, which marked a healthy increase of 4.3 percent from a year earlier and a 1.1 percent increase from the previous quarter.
First quarter’s year-over-year gain of 4.3 percent was the strongest growth rate since first quarter 2014, highlighting the current level of strength within the industry. The national RRI, which measures overall remodeling activity across all product segments, has now posted sixteen consecutive quarters of year-over-year gains since remodeling activity bottomed out in 2011. Metrostudy’s latest forecast calls for year-over-year growth to average 4.4 percent throughout 2016 and 3.8 percent in 2017.
“Remodeling activity in the U.S. continues to expand as the housing market rolls on and as a tightening labor market translates to higher wage growth for American consumers. The housing market was one of the few bright spots among first quarter economic reports, and continued increases in sales and home values are propelling home renovations” said Mark Boud, Chief Economist at Metrostudy. “As for jobs, the labor market flexed its muscles in March, but April’s report fell short of expectations. However, April saw the third-best monthly gain in wages during the past year.”
Boud also added that the remodeling and renovation market will have potential for further growth, as homeowners who have low mortgage rates locked-in will prefer to improve their current home rather than move and buy another home at a higher mortgage rate. Metrostudy’s remodeling forecast looks for a steady expansion over the next few years.
Metrostudy produces the RRI to provide the industry visibility into local market remodeling activity, forecasted future activity, and potential demand. According to the company’s first quarter report, 371 out of 381 Metropolitan Statistical Areas are expected to see year-over-year growth in remodeling and replacement projects in 2016, with average growth of 4.2 percent.
For more information on accessing the full quarterly report, please email RRI@hanleywood.com .
About the Residential Remodeling Index
The RRI is a quarterly measure of the level of remodeling activity in 381 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 $1000. 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 381 Metropolitan Statistical Areas in the U.S. are available back to 2004. In addition, Metrostudy also produces annual estimates of project counts and expenditures as well as forecasts of the quarterly RRI and annual projects and expenditures.