Metrostudy, a Hanley Wood company, announced today the release of its fourth quarter 2017 Residential Remodeling Index (RRI), detailing activity in the remodeling and replacement industry.
The Residential Remodeling Index closed out 2017 on a strong note, reaching a new all-time high of 111.3 in the fourth quarter. The latest reading marked a year-over-year increase of 4.9 percent and a steady 1.2 percent gain from the previous quarter. The RRI has now experienced twenty-three consecutive quarters of year-over-year gains since the bottom of remodeling activity in 2011.
The forecast for 2018 has strengthened, reflecting the strong economy and increased demand in areas that were hit by 2017’s natural disasters. The RRI is projected to average year-over-year gains of 5.2 percent throughout 2018, up from expectations of 4.7 percent in Metrostudy’s previous release. Longer term, the RRI is forecast to continue reaching new highs through 2020.
“Remodeling activity is robust, reflecting a U.S. economy with strong underlying growth. The most elusive indicator through the nine-year recovery has been wage growth, which finally made a strong showing during this past quarter,” said Mark Boud, Chief Economist at Metrostudy. “Several times in the past few years, wage growth appeared to be picking up, only to be downwardly revised in subsequent reports. However, there is greater optimism that 2018 pay gains will be more durable – job growth is steady and the unemployment rate has fallen to a 17-year low. A tight labor market translates to companies having to compete more intensely and pay higher wages for workers. At the same time that American workers receive more pay, the remodeling industry also stands to benefit greatly as mortgage rates rise from historical lows over the next few years. With the housing market tight and home prices high, higher rates will persuade more Americans to stay put and remodel the homes they currently have, rather than buy a new home.”
Metrostudy produces the RRI to provide the industry visibility into local market remodeling activity, forecasted future activity, and potential demand. According to the company’s fourth quarter report, all 381 Metropolitan Statistical Areas are forecast to see growth in project volume in 2018, and the average growth rate is expected to be 4.6 percent. This marks a continuation of trends observed in 2017, which was the first year since launching the RRI that all 381 MSAs were forecast to see growth, underscoring the current level of strength in the market.
