An increase in construction costs has resulted in a slight decline in sentiment across the home remodeling industry. The National Association of Home Builders’ Q3 Remodeling Market Index (RMI) came in at 63, which was down two points from the previous quarter but still signals positive market conditions at above 50. The RMI is based on two components: the Current Conditions Index, which averaged 72, and the Future Indicators Index, which averaged 55. Large projects over $50,000 and moderate projects, ranging in cost from $20,000 to $50,000, saw slight declines. However, the index for projects costing less than $20,000 rose to 77.
“An RMI of 63 is consistent with NAHB’s forecast for steady 2% growth in remodeling spending over the next two years, but remodelers are facing various headwinds,” said NAHB Chief Economist Robert Dietz. “In addition to possible uncertainty associated with the election, it remains difficult to find skilled construction labor, and interest rates have become a double-edged sword. Although rates have come down, they remain higher than they were several years ago, and some home owners are waiting to see if they come down further before moving ahead with substantial remodeling projects.”