Remodeling market humming along in US

Construction and demolition scrap emanating from residential worksites is likely being generated at a healthy pace in 2018, based on the results of a survey of that industry sector.

Washington-based Metrostudy says its second quarter 2018 Residential Remodeling Index (RRI) reached “a new all-time high of 114.4,” a reading it says was 5.2 percent higher than a year earlier and is up by 1.3 percent from the previous quarter.

The RRI has experienced 25 consecutive quarters of year-over-year gains since activity bottomed in 2011, according to Metrostudy. The index’s strong year-over-year growth is being fueled by the long economic expansion and a still-strong housing market, despite the latter showing some recent slowing in sales, adds the firm.

“The U.S. economy is in the midst of its longest streak of consecutive monthly job growth in history, and, the median existing home price has recorded seventy-six consecutive months of year-over-year gains,” says Mark Boud, chief economist at Metrostudy. “With record-setting levels in employment growth and home equity, it is little wonder that Americans are investing in home upgrades. We expect the remodeling industry to close strong in 2018, with more moderate but still-steady growth in 2019.”

Boud also warns of potential “headwinds,” including “slowing home sales amid tight inventory [that] is limiting remodeling growth potential, as is the acute shortage of construction labor.” He adds, “More recently, even before the steel and aluminum tariffs were initiated, we saw a sharp rise in costs for residential construction materials. Rising costs and effects of tariffs will need to be watched carefully over the next several quarters.”

Metrostudy, a Hanley Wood company, compiles the RRI as a quarterly measure of the level of remodeling activity in 381 metropolitan statistical areas in the United States.