Remodeler Sentiment Remains Positive in 2022Q3 but Down Year-Over-Year

The National Association of Home Builders/Westlake Royal Remodeling Index (RMI) posted a reading of 77 in 2022Q3. That is a year-over-year decline of 10 points (2021Q3).

The NAHB explains that the RMI is based on a survey that asks remodelers to rate various aspects of the residential remodeling market as ‘good,’ ‘fair,’ or ‘poor.’ Responses from each question are converted into an index that lies on a scale of 0 to 100. An index number above 50 indicates that a higher share of survey respondents view conditions as good rather than poor.

The RMI is made up of two major component indices:

1. The Current Condition Index, which was at a reading of 82 in 2021Q3, down 8 points year-over-year (2021Q3)
2. The Future Indicator Index, which was at a reading of 71 in 2021Q3, down 13 points year-over-year (2021Q3)

According to the NAHB, an overall RMI of 77 points to positive remodeler sentiment, which they attribute to increases in home equity over the past two years, ongoing demand for work at home, and an aging housing inventory. However, the NAHB believes the year-over-year decline in the two indices indicates weakness in the market even though the rise in interest has more of a negative impact on new construction than remodeling.

Looking forward to 2023, the NAHB anticipates a small increase for remodeling activity, while the rate of new construction will continue to decline.