Tight lending, consumer confidence slows remodeling

The current state of the national economy continues to affect the remodeling industry, according to the latest National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI).

The index dropped to 41.7 in the third quarter from 43.9 in the second quarter, after having reached a four-year high of 46.5 in the first quarter.

An RMI below 50 indicates that more remodelers report that market activity is declining than report that it is increasing.

“The current economic instability continues to affect consumer confidence, therefore we have seen a drop off in remodeling activity for the last two quarters,” said David Crowe, NAHB chief economist. “In order for the remodeling market to pick up, homeowners need to have access to less restrictive lending requirements and see their economic future stabilizing.”

Regionally, current remodeling market conditions shrank in two areas: the Northeast to 43.9 (from 48.1 in the second quarter) and the West to 40.9 (from 48.2). Increases were seen in the Midwest at 46.8 (from 44.4) and the South at 47.1 (from 42.9).

Future market indicators fell in all regions, except for the South, where it edged up to 42.2 from 41.6 in the second quarter.

“Remodelers report that while many consumers show interest in having remodeling work done, they are slow to commit to projects,” said Bob Peterson, NAHB remodelers chairman. “Consumers are in a ‘wait and see’ mode with regard to current economic conditions.”