Remodeling Confidence Up Despite Material Shortages
The National Association of Home Builders (NAHB) recently released its Remodeling Market Index (RMI) for the second quarter. The reading of 87 is 14 points higher from the second quarter of 2020—an indicator that residential remodeling confidence, for all project sizes, has increased.
- Current Conditions Index: Averaged 91—a 14-point increase from the second quart of 2020. All components also increased compared to Q2 of last year: large remodeling projects ($50,000 or more) increased 20 points to 90, moderately-sized remodeling projects (at least $20,000 but less than $50,000) increased 13 points to 91 and small remodeling projects (under $20,000) increased nine points to 92.
- Future Indicator Index: Averaged 83—up 13 points YoY. Both components increased as well: the current rate at which leads and inquiries are coming in rose nine points to 81 and the backlog of remodeling jobs jumped 19 points to 86.
Demand for homes hasn't negatively impact remodeling confidence. In fact, rising home values and the bustling markets are incentivizing remodelers even with supply and material shortages.
"Remodelers in many parts of the country are experiencing very strong demand for their services," said NAHB Remodelers Chair Steve Cunningham. "So far, remodelers have been able to accommodate most customers, but as the backlog of projects in the pipeline grows, there is a tendency for them to take longer to start and complete."
"As the market attempts to balance the number of households that want homes and the number of homes available, the value of homes is rising, helping to fuel demand for remodeling," said NAHB Chief Economist Robert Dietz. "This has been sufficient to keep remodelers optimistic, despite the significant headwinds of labor and material shortages. And while there has been some easing of framing lumber prices, prices for other materials like OSB remain significantly high-OSB is up more than 500% since the start of 2020."