Remodeling Market Index flattens in fourth quarter 2001

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Residential remodeling flattened out in the fourth quarter of 2001, according to the National Association of Home Builders' latest Remodeling Market In-dex.|ret||ret||tab|

Both the current market and future market indices remained unchanged in the fourth quarter of 2001 compared to the previous quarter, which was down substantially from the first half of the year. |ret||ret||tab|

During the fourth quarter, the RMI for current market conditions inched slightly lower to a 45 rating while future market conditions registered a 42.8 rating, barely higher than the third quarter score, ac-cording to an NAHB press release.|ret||ret||tab|

Despite weaker activity in the market during the last six months of the year, NAHB expects consumer expenditures for remodeling in 2001 to total $161 billion, up 5 percent compared to the previous year, and the strongest year on re-cord for this segment of the construction industry.|ret||ret||tab|

"It isn't surprising that remodeling ac-tivity eased up after September 11," said Bill Owens, CGR, NAHB Remodelors Council chairman and a remodeling contractor from Columbus, Ohio. |ret||ret||tab|

"We expected a slowdown in remodeling in the second half of 2001 due to the sluggish economy and rising unemployment. Things will start looking up as the economy begins to gain momentum and more homeowners, buoyed by the continuing appreciation in real estate values, move back into the remodeling market," he added.|ret||ret||tab|

The latest market index is based on re-sponses regarding the present demand for major additions and alterations of $25,000 or more, and minor additions and alterations for less than $25,000, and for maintenance and repairs. The future expectations index is derived from questions that ask for the volume of "calls for bids," the amount of work committed for the next three months, the current backlog of remodeling jobs and the number of appointments for job proposals. Any index more than 50 indicates that more remodelers view market conditions as favorable than unfavorable.|ret||ret||tab|

Each quarterly RMI survey includes a series of special questions that focus on different aspects of remodeling. In the fourth-quarter survey, remodelers were asked what changes in types of remodeling jobs their companies experienced following the events of Sept. 11. Of the remodelers surveyed, 35 percent reported no changes in the types of their jobs since the terrorist attacks. In the survey, 28 percent indicated that their clients were choosing smaller or scaled-back projects, and 10 percent answered that their firms were working on larger projects since Sept. 11.|ret||ret||tab|

The survey also asked remodelers to identify the most significant problems their companies faced during 2001. The top three responses were all labor-related. Availability of skilled labor was named as the most significant issue by 76 percent of those surveyed. Labor costs was ranked the second most serious problem by 62 percent of the respondents, followed by retaining employees, which was selected by 43 percent.|ret||ret||tab|

Additionally, remodelers were asked which of the problems they faced in 2001 they expected to continue in 2002. The survey indicated that 64 percent of the respondents reported that availability of skilled labor will continue to be a significant issue for their companies in 2002. Labor costs were identified as a continuing concern by 57 percent of the remodelers and government regulations by 42 percent.|ret||ret||tab|

When asked what problems remodelers expected to face in 2002 that they did not face the year before, survey participants ranked lack of work, mold, consumer confidence and material costs as the most important emerging issues.|ret||ret||tab|

Lastly, remodelers were asked to name the significant issues that will shape the industry during the next five years. |ret||ret||tab|

Topping the list was availability of skilled labor, singled-out by 80 percent of the respondents, while 50 percent chose the aging population as an issue that would most affect their businesses in the future. Also, 42 percent of those surveyed identified government regulation and the role of the Internet as equally important issues that will affect the industry over the course of the next five years.[[In-content Ad]]