Remodeling Market Index (RMI)

National Association of Home Builders reported their Remodeling Market Index (RMI) posted a reading of 58 in the final quarter of 2015, one point above the previous quarter. This was consistent with similar results over the past year and a half, indicating sustained confidence in the market from remodelers.

The Remodeling Market Index (RMI) is based on a quarterly survey of NAHB remodeler members that provides insight on current market conditions as well as future indicators for the remodeling market.

Remodeling Market Index by National Association of Home BuildersNational Association of Home Builders RMI

An RMI orRemodeling Market Index above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity. Remodelers’ outlook on the market has been positive for the past three years and the confidence has been continuous over this period.

The consistency with the previous quarter extended to all regions of the country. From the third quarter of 2015 results, the RMI was up two points to 66 in the Northeast, unchanged at 58 in the Midwest, up one point to 57 in the South and up two points to 63 in the West. At 59, the RMI’s future market conditions index gained a point from the previous quarter. Among its four components, calls for bids and backlog of jobs each rose one point from the previous quarter–to 58 and 61, respectively.  Meanwhile, the amount of work committed and appointments for proposals each rose two points from the previous quarter’s readings–to 57 and 60, respectively.

The RMI’s current market conditions index stood at 56, unchanged from the previous quarter.  Among its components, major additions and alterations, the slowest-recovering component, rose to 54 from 52 in the previous quarter. The smaller remodeling projects decreased one point to 56 and the home maintenance and repair component of the RMI remained at 58.

About RMI Methodology used by National Association of Home Builders

The Remodeling Market Index (RMI) is based on a quarterly survey of NAHB remodeler members that provides insight on current market conditions as well as future indicators for the remodeling market.

The RMI survey asks remodelers to rate a variety of aspects of the remodeling market as ‘higher’ or ‘lower’ than three months earlier.  Each question in the RMI survey is measured on a scale of 0 to 100, where an index number of 50 indicates equal numbers of remodelers report activity ‘higher’ and ‘lower’ than the previous quarter.

When applicable, the survey asks remodelers to rate rental and owner-occupied housing separately.  According to the Census Bureau, between 1995 and 1999, 69 percent of remodeling activity was done on owner-occupied housing, and 31 percent on rental properties (this data series has been discontinued).  These shares are used to weight the index for each question.

The Current Market Index is a weighted composite of remodelers’ rating of market demand for three components of the remodeling market at the present time compared to 3 months earlier—major additions and alterations (jobs valued at $25,000 or more), minor additions and alterations (jobs valued at less than $25,000), and maintenance and repair.  According to the Census Bureau, 30 percent of remodeling activity was major additions and alterations, 40 percent minor additions and alterations, and 30 percent maintenance and repair.  These shares are assigned to each component when weighting the Current Market Index.

The Future Market Indicators Index is an average of four components—volume of calls for bids, the amount of work committed for the next three months, the backlog of remodeling jobs, and the number of proposal appointments at this time compared to three months earlier.

The Overall Remodeling Market Index is calculated by averaging the Current Marketing Index and the Future Market Indicators Index.  Any number over 50 indicates that more remodelers view remodeling market conditions as higher than the previous quarter. Results are seasonally adjusted.

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