Metrostudy/Zonda Release Q3 2019 Residential Remodeling Index (RRI)— Activity Remains Up On Consumer Strength, But Outlook Points to Leaner Growth
WASHINGTON, D.C. (November 26, 2019) — Metrostudy/Zonda, the largest home building data platform, announced today the release of its third quarter 2019 Residential Remodeling Index (RRI), detailing activity in the remodeling and replacement industry.
The national Residential Remodeling Index improved to a new high of 118.9 in the third quarter of 2019, marking a 0.5 percent gain from second quarter, and a 2.8 percent increase from one year earlier. The RRI has now posted thirty consecutive quarters of year-over-year increases since national remodeling activity had bottomed in 2011; however, annual rates have cooled compared to the 5 percent growth that averaged the last several years. Metrostudy/Zonda’s latest forecast calls for continued gains in remodeling activity over the next few years, but growth is expected to remain leaner. The RRI is now projected to average year-over-year gains of 2.2 percent in 2020 and 2.4 percent in 2021.
“U.S. job growth beat expectations in October and hiring in the previous two months was revised upward as the strength of the consumer continues to support an economy that now finds business investment and manufacturing being constrained by a near 16-month long trade war with China,” said Mark Boud, Chief Economist at Metrostudy/Zonda. “Even if a trade agreement with China is reached, slower employment growth is projected over the next few years as the economic cycle wanes. In addition, existing home sales continue to struggle under lack of supply, a trend that will likely continue given the low rates of new home construction, particularly at the lower price levels. Weaker employment-generated demand and low housing turnover points to slower rates of remodeling growth compared to the last few years of booming business,” says Boud.
Metrostudy/Zonda produce the RRI to provide the industry visibility into local market remodeling activity, forecasted future activity, and potential demand. According to the company’s third quarter report, 380 Metropolitan Statistical Areas are expected to see growth in 2019 project volume, and among these markets, the average growth rate is expected to be 3.1 percent.
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 $1,000. 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/Zonda also produce annual estimates of project counts and expenditures as well as forecasts of the quarterly RRI and annual projects and expenditures.
About Hanley Wood (Metrostudy/Zonda)
Hanley Wood, represents the housing industry’s leading provider of rich data, backed by Zonda and Metrostudy, and the industry’s top advisors for residential real estate development and new home construction. With products and services geared for homebuilders, multifamily developers, lenders, and financial institutions, we provide innovative solutions to maximize opportunities in today’s real estate development landscape.