Metrostudy, a Hanley Wood company, announced today that its second quarter 2017 Residential Remodeling Index (RRI) increased to a new high of 108.7, representing a solid 4.7% increase from 103.9 one year earlier and a 1.3% increase from 107.3 in the previous quarter. The index has now seen twenty-one consecutive quarters of year-over-year gains since 2011, which was the bottom of the remodeling market in terms of activity.
As the U.S. economy sees continued improvements, the outlook for remodeling remains positive. At year-end 2017, the RRI is expected to see a 4.6% year-over-year increase. Thereafter, between first quarter 2018 and fourth quarter 2020, the index is forecast to average year-over-year increases of 3.4% and quarter-to-quarter increases of 0.8%.
“At the mid-point of 2017, the remodeling market remained vigorous and on track for more near-term gains. Current demand for home-improvement is healthy as U.S. economic growth accelerated in second quarter 2017, boosted in part by a resurgence in consumer spending. U.S. employers also added more workers than expected in July, while June’s employment numbers were upwardly revised. Additionally, current shortages of new homes are forcing many would-be home buyers to choose renovation over purchase,” said Mark Boud, chief economist at Metrostudy. “Although stronger wage growth is still desired in the labor market, consumer confidence did rebound to a 16-year high in July. We expect the Residential Remodeling Index to continue increasing this year and through the three-year forecast. Any easing in project activity would more likely be due to limitations caused by labor shortages in the construction industry and a tight supply of existing homes for sale, rather than any deterioration in consumer driven demand for home renovation.”
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 second quarter report, all 381 Metropolitan Statistical Areas are expected to see year-over-year growth in remodeling and replacement projects in 2017, with average growth of 4.4%. This marks the first year since launching the RRI that all 381 MSAs are forecast to see growth, underscoring the current level of strength in the market.