The strength of the RMI, especially in owner-occupied properties, shows that home owners are investing in remodels as home prices stabilize,” ~ NAHB Remodelers Chairman George Moore Jr.
Minneapolis, MN (PRWEB) October 27, 2012
The National Association of Home Builders (NAHB) released its October 2012 Remodelers Market Index (RMI) report tracking the exceptional performance of Home Builders and Remodelers in Quarter 3. The RMI is at its highest point since the third quarter of 2005, tracking the positive trends recently seen in the rest of the housing sector. The strongest gains are seen in the luxury homes sector.
Destiny Homes owner Butch Sprenger says, "Each of the major RMI components shows marked progress at higher levels than we have witnessed at any time over the past six years, demonstrating that remodeling investments in housing are holding their value." The NABH survey responses are aggregated into two major component indices. In the third quarter of 2012, the major RMI component on current market conditions rose from 46 to 52, a hefty jump putting the strength of the housing industry score over the 50 percent threshold. The future indicators component increased from 44 to 49, a full five points.
"The improvement in the RMI provides more evidence that the remodeling industry is making the orderly recovery from its low point in 2009 as we’ve been expecting,” said NAHB Chief Economist David Crowe. “Although remodeling projects over $25,000 are now showing some signs of strength, they are still lagging behind smaller property alterations and maintenance and repair jobs. The recovery of the remodeling market in general, and large projects in particular, continues to be constrained by factors such as tight credit and problematic appraisals."
NAHB provides Remodeling Market Index information that ranges from home additions, full house makeovers to repairs. It is helpful to home builders for setting future hiring expectations, making decisions to pull building permits, or for investing in the purchase of lots to build new home on in the future.
Future market indicators in almost every region and condition have a showing of strong gains over the previous quarter:
- Northeast, 38 down from 41, the only drop
- Midwest, 50 up from 46
- South, 52 up from 46
- West, 52 up significantly from 42
- Calls for bids, 48 up from 44
- Level of work committed for next three months, 46 up from 43
- Pent-up remodeling jobs, 50 up from 46
- Appointments for proposals, 51 up from 43, showing a strong future
At the Semi-Annual Construction Forecast Conference on Wednesday, Oct. 17, participating economists discussed the increase in home prices, the increase in home values, the increase in home builder stocks, and constructions positive economic outlook for 2013. The reasons they determined behind the construction industry's positive momentum include:
1) Pent-up demand for household formations
2) Rising consumer confidence in economy
3) Strong and Increasing builder confidence in all three sectors of the industry: remodeling, multifamily and single-family construction
4) Growing demand for rental homes
5) More than 100 metros currently on the NAHB/First American Improving Markets Index
The Mortgage Bankers Association(MBA) anticipates that 2013 will see significant improvements in the housing sector, stating, "The growth will be driven by a combination of the biggest annual increase in residential fixed investment we have seen since 1992, as well as small increases in consumer spending and business investment. MBA expects to see purchase originations climb to $585 billion in 2013, up from a revised estimate of $503 billion for 2012. In contrast, refinances are expected to fall to $785 billion in 2013, down from a revised estimate of $1.2 trillion in 2012.”
CoreLogic Residential Properties Equity Improvement Reports to date in 2012 has reported a correlation that as home values increase, home remodeling has increased proportionally. "We expect a 16 percent increase in purchase originations in 2013 over 2012, with every quarter in 2013 exceeding the same quarter of 2012. The increase in purchase volumes will be driven by continued modest growth in the economy, an increase in owner-occupied sales financed with mortgages as opposed to cash purchases by investors, an increase in new home sales and a small increase in average home prices," states the report.
“With existing home sales up, we are seeing upticks in the RMI due in part to the remodeling new home owners undertake after they buy a home and move in. Minneapolis homeowners are feeling more positive about our economy and therefore are more comfortable making the decision to start that home renovation project they have been sitting on,” comments Sprenger.
Destiny Homes feel confident more encouraging increases in the housing market will top-off 2012 by the year's end. Minneapolis area residents looking to build a new a new home or enjoy the updates of a home renovation may call to get on the schedule.