A strong economy, coupled with a housing market characterized by increasing home prices and insufficient inventory stock in many metros, is helping drive big-ticket remodeling activity, according to a new report from Metrostudy. The quarterly Residential Remodeling Index (RRI) recently released its data covering Q1 2018, showing a 5.2 percent year-over-year increase. Metrostudy also reports that residential activity of this sort is growing at its fastest pace in four years.
As reported by Metrostudy’s sister company, Remodeling Magazine, the RRI “is based on a statistical model that takes into account such data as household level remodeling permits, employment statistics, and a market's economic health. It then uses that model to predict the number and dollar volume of home improvement and replacement projects worth at least $1,000.”
During Q1, the RRI hit a reading of 112.9, the highest reading thus far recorded. The rating of 112.9 means that “economic conditions known to influence remodeling activity” were 12.9 percent more positive than during the previous peak in 2007, prior to the Great Recession. The RRI has been steadily rising for 24 consecutive quarters, and Q1’s rating was up 1.4 percent over the period three months prior.
Metrostudy forecasts that the number of projects worth $1,000 or more nationwide will rise 5 percent in 2018, hitting a tally of 12.55 million. Metrostudy estimates the value of those projects to hit $194.2 billion for the year. Metrostudy anticipates RRI growth of another 2.7 percent in 2019.
Metrostudy Chief Economist Mark Boud said, “Remodeling activity is being driven by solid gains in employment and rising home values, factors that are giving homeowners the confidence to invest in their homes. Americans are not only undertaking a greater number of remodeling projects, but larger and more expensive ones. And as a reflection of the long, slow economic expansion that we have been in, many more Americans are just now initiating replacement-type projects that had been deferred during the recovery from the Great Recession. We expect another strong year for the remodeling industry in 2018, and are waiting to see what effect recent tax cuts have on the economy. Early surveys suggest some Americans are increasing their remodeling budgets due to their taxes being lowered.”
To read more about the projects homeowners are undertaking, and how they affect resale value, click here.