Metrostudy Releases Q3 2018 Residential Remodeling Index (RRI)— Activity Remains Strong on Top of Job and Wage Growth, Some Challenges Emerging
WASHINGTON, D.C. (November 26, 2018) — Metrostudy, a Hanley Wood company, announced today the release of its third quarter 2018 Residential Remodeling Index (RRI), detailing activity in the remodeling and replacement industry.
The national Residential Remodeling Index climbed to a new all-time high of 115.7 during the third quarter of 2018, a strong increase of 5.2 percent from one year earlier and up 1.1 percent from second quarter. The RRI has now experienced twenty-six consecutive quarters of year-over-year gains since activity bottomed in 2011.
The RRI is projected to continue increasing over the next three years, but annual growth rates are expected to moderate to an average of 2.9 percent in 2019 and 2.3 percent in 2020, before firming again in 2021. Moderating growth over the forecast will be mostly correlated with a plateau in employment growth, decreasing home affordability and declining home sales.
“Remodeling continues to be fueled by a hot jobs market. October job gains exceeded forecasts and the unemployment rate held at a 48-year low. And more significantly in October, American workers saw the biggest gain in average hourly earnings since 2009,” said Mark Boud, Chief Economist at Metrostudy. “While the economy is keeping remodelers extremely busy, there are some challenges that could limit remodeling potential over the medium-term. The cost of labor and materials is on the rise due to the shortage of construction workers and the effects of tariffs. And, existing home sales are slowing as mortgage rates rise, a trend that reduces the number of remodeling projects done before and after a sale. On the upside, as rates increase, remodeling will benefit from the offset of more people choosing to stay in their current homes and make improvements there. We remain net-positive on the industry’s outlook and expect the market to continue growing over the next several years.”
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 third quarter report, all 381 Metropolitan Statistical Areas are expected to see annual growth in 2018 project volume, and these markets are expected to average growth of 4.3 percent. For 2019, 379 MSA’s are expected to see annual project gains, with these markets averaging 2.8 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 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.
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