The National Association of Home Builders (NAHB) recently released its NAHB/Westlake Royal Remodeling Market Index (RMI) for the third quarter of 2023. The index showed a decline, with a reading of 65, which is three points lower than the previous quarter. Despite the dip, the index remains above 50, indicating that more remodelers view the market conditions as good rather than poor. However, the decline suggests that the remodeling market is experiencing some cooling off, particularly in larger projects.
Current Conditions and Future Indicators
The Current Conditions Index, which is an average of three components including large, moderately-sized, and small remodeling projects, fell five points to an average of 72. Specifically, large remodeling projects ($50,000 or more) decreased by five points to 67, moderate projects (between $20,000 and $50,000) fell by four points to 73, and small projects (under $20,000) declined by five points to 76.
The Future Indicators Index, which measures the rate of incoming leads and inquiries as well as the backlog of remodeling projects, also showed a decline. It fell three points to 57 compared to the previous quarter. The component measuring the rate of incoming leads and inquiries dropped by three points to 56, while the backlog of remodeling jobs decreased by two points to 59.
NAHB/Westlake Royal Remodeling Market Index (RMI) Current Conditions Index
(Seasonally Adjusted)
NAHB/Westlake Royal Remodeling Market Index (RMI) Future Indicators Index
(Seasonally Adjusted)
What’s Behind the Decline?
According to NAHB Remodelers Chair Alan Archuleta, “While there is still demand for remodeling, we are seeing some customers pull back a bit, especially for larger projects, due to higher prices and increased interest rates.” NAHB Chief Economist Robert Dietz added, “Although the RMI is down slightly, it remains in positive territory. The remodeling market, less impacted by interest rates, continues to outperform new construction.”
The Takeaway
While the remodeling market still shows strength, especially when compared to new construction, the decline in both current conditions and future indicators suggests that remodelers and homeowners alike should exercise caution. If you’re considering a remodeling project, now may be the time to consult with a professional to navigate these changing conditions.
Looking to remodel your home in the St. Louis area? Contact a professional REALTOR® at MORE, REALTORS who can help you understand how much your remodeling project may improve the value of your property and can help you make an informed decision as to whether the project would be a good investment.
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