Metrostudy Releases Q4 2016 Residential Remodeling Index (RRI)— Remodeling Riding High, Outlook is Bright Even if Mortgage Rates Rise
WASHINGTON, D.C. (February 15, 2017) — Metrostudy, a Hanley Wood company, announced today the release of its fourth quarter 2016 Residential Remodeling Index (RRI) detailing activity in the remodeling and replacement industry.
The remodeling industry closed 2016 on a strong note with the national RRI Activity Index reaching a new all-time high of 106.1, which also represented a healthy increase of 4.5 percent from one year earlier. The index has now seen nineteen consecutive quarters of year-over-year gains since 2011, the bottom of remodeling activity nationwide. Metrostudy’s latest forecast calls for continued increases over the next few years, with year-over-year growth of the national Activity Index averaging 4.4 percent in 2017, 3.1 percent in 2018, and 2.7 percent in 2019.
“The remodeling industry in the United States will continue to be fueled by an economy approaching full employment, growing paychecks, and continued gains in home equity over the next few years,” said Mark Boud, Chief Economist at Metrostudy. “Mortgage rates are forecast to increase through 2017 and beyond. We will be watching closely to see what happens in the remodeling market when mortgage rates surpass the 5 percent mark. Higher rates will slow home sales and price appreciation, but the net positive for the remodeling industry will be a large number of households staying in the homes they locked-in at the 4-percent-or-below range, and choosing to renovate there. The outlook is positive for home remodeling, but the industry should keep a close eye on current challenges pertaining to a shortage of construction workers. The shortage, if exacerbated, could further increase job costs and diminish project potential.”
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 fourth 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 4.3 percent –this marks the first year since launching the RRI that all 381 MSAs are forecast to see growth.
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.
Metrostudy is the leading provider of primary and secondary market information to the housing and residential construction industry. Metrostudy’s actionable business intelligence informs investment decisions that mitigate risk and grow revenue for builders, developers, lenders, suppliers, retailers and manufacturers. It’s the construction industry’s only integrated data intelligence solution supported by the most extensive U.S. geographic coverage. Learn more at Metrostudy.com.
About Hanley Wood
Hanley Wood is the premier company serving the information, media, and marketing needs of the residential, commercial design and construction industry. Utilizing the largest analytics and editorially driven Construction Industry Database, the company provides business intelligence and data-driven services. The company produces award-winning media, both digital and print, high-profile executive events, and strategic marketing solutions. To learn more, visit hanleywood.com.