Metrostudy/Zonda, the largest home building data platform, announced today the release of its fourth quarter 2019 Residential Remodeling Index (RRI), detailing activity in the remodeling and replacement industry.
In the fourth quarter of 2019, the national RRI reached a new high of 119.6, marking a 0.5 percent gain from the previous quarter and an increase of 2.5 percent from one year earlier. The RRI has now posted 31 consecutive quarters of year-over-year (YoY) gains since national remodeling activity had bottomed in 2011; however, YoY growth has moderated compared to the average 4.8 percent that was observed between 2016 and 2018.
Metrostudy/Zonda expects remodeling activity to continue to expand over the next few years, but growth is forecast to remain moderate as the economic cycle eventually wanes and low housing turnover takes some potential off the table. The RRI is projected to average YoY gains of 2.6 percent in both 2020 and 2021, before firming to an average of 3 percent in 2022.
“The remodeling industry continues to ride the strength of the economy, but the tight housing market and high cost of labor has caused slower renovation growth compared to years past, as some of the activity that is initiated in the wake of new homeownership has been limited,” says Mark Boud, Chief Economist at Metrostudy/Zonda. “In December, the inventory of existing homes in the U.S. dropped to a 3.0-month supply, the lowest since the National Association of Realtors began tracking that data in 1999. The shortage of existing homes for sale is being worsened by low levels of new home construction, a trend that we expect to continue over the next several years as builders find it difficult to deliver homes in the lower price ranges. As more Americans choose to stay put in a tight market, they will upgrade their current homes, an offset that will continue to benefit remodeling over the forecast,” said Boud.
Metrostudy/Zonda produce 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, 359 Metropolitan Statistical Areas are expected to see growth in 2020 project volume, and among these markets, the average growth rate is expected to be 3.2 percent.
For more information on accessing the full quarterly report, please email RRI@hanleywood.com.