As Home Equity Returns, More Home Owners Remodel
Home remodeling saw greater demand in the third quarter as a growth in home equity and home sales prompted more home owners to tackle remodeling projects, according to the National Association of Home Builders’ home remodeling index.
The remodeling market index moved higher in the third quarter rising two points to 57 — the highest reading since the first quarter of 2004. A reading above 50 indicates that more remodelers are reporting market activity is higher than lower.
“The growth in home equity and home sales prompted home owners to remodel as they prepare to move or undertake upgrades that they put off during tough times,” says NAHB Remodelers Chairperson Bill Shaw.
All three major components measured in the NAHB remodeling index increased during the third quarter: major additions and alterations, minor additions and repairs, and maintenance and repair.
“In addition to existing home sales, which support remodeling activity as owners fix up their homes before and after a move, remodeling has benefitted from rising home values,” says NAHB Chief Economist David Crowe. “This boosts home equity that owners can tap to finance remodeling projects. We expect existing home sales and house prices to increase, but at a slower rate over the next year, so the demand for remodeling services should also increase, but more gradually over that period.”