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Remodeling Market Index Hits Four-Year High

The Remodeling Market Index (RMI) rose to 46.5 in this year’s first quarter, marking a five-point gain from the fourth quarter of 2010 and its highest level in the past four years. While the index has not yet breached the 50-point mark — when more remodelers view market activity as better than the previous quarter — the latest gain is encouraging evidence that the market is headed toward recovery. The RMI component gauging current market conditions rose to 46.1 in the first quarter of 2011 from 43.3 in the previous quarter, while the component gauging future market indicators climbed to 46.8 from 39.7. Regional breakdowns for current remodeling market conditions showed growth in all but one area. The Northeast’s RMI reading was 46.1 in the first quarter compared to 38.8 at the end of last year, while the South hit 46.1 (up from 45.8), the West rose to 46.1 from 39.7, and the Midwest RMI declined to 47.1 from 54.3 previously. All current remodeling market indicators gauged by the RMI posted gains, including major additions (at 50.3), minor additions (at 48.0), and maintenance and repairs (at 39.5). Future market indicators also improved across the board, including calls for bids (now at 53.1), appointments for proposals (52.4), backlogs of remodeling jobs (49.7), and amount of work committed for the next three months (at 32.1).

What’s Holding Customers Back?

A special questions section of the RMI survey asked participants to note the top reasons that prospective customers are holding back from remodeling their homes. Fully 90% indicated that customers think it is hard to get financing, while 81% said customers have lost equity in their homes, 74% said customers are uncertain about their future economic situation, 67% cited customers’ reluctance to invest in their home when they are uncertain if it will hold its value, 62% cited negative media stories, and 54% indicated that inaccurate appraisals are making financing more difficult.

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