Third-quarter results from NARI’s Remodeling Business Pulse data of current and future remodeling business conditions is positive overall with mixed sentiment about the future.
Research gathered in September shows NARI members are currently experiencing a positive business climate—in fact, the most positive so far this year and up by 2.5 percent since last quarter.
Yet predictions in the next three months are at the weakest point this year, dropping 6.3% since the second quarter.
“Overall, NARI members are experiencing an upswing; however, the future paints a more mixed picture,” says Tom O’Grady, CR, CKBR, chairman of NARI’s Strategic Planning & Research Committee and president of O’Grady Builders in Drexel Hill, Pa.
The research panel, this quarter, attribute future declines to the following: high uncertainty at 76%, unemployment at 24%, and difficulty in acquiring loans, also at 24%.
Member commentary focused this high uncertainty at the upcoming election and the economy.
As one member put it: “Economic uncertainty due to elections. Neither candidate had presented a clear strategy on how they plan to get Congress to work together on any of the critical problems our country faces right now. We need Congress to work together before banks, private companies and independent individuals let investments flow again. Once money begins to flow, sales will then grow.
Despite the uncertainty, it has not hindered business yet. NARI members are feeling positive about all four indicators of business growth: inquiries, requests for bids, bid conversions and value of jobs sold.
The primary driver of this growth has stayed consistent over the last three quarters, with 81 percent reporting postponement of projects as the primary force behind homeowner motivations. The additional two reasons included improving home prices, at 43%, and certainty about the future, at 41%.
“Pent-up demand continues to be a huge contributor to home improvement activity, particularly in those who are choosing to stay in homes longer term,” O’Grady says. This long-term mentality is driving an expanding market in universal design and energy-efficient projects, but also shrinking a project’s size and cost.
In addition, increases in housing prices, affordability and low interest rates are sparking some activity in the home sales market, which often leads to remodeling projects. This trend is in position to become a possible significant driver in 2013. (Read “Highlights from the 2012 Fall HIRI Conference” for more about where the housing market headed.) Although as of now, the difficulty in obtaining financing continues to cast a shadow over significant growth of this trend. –Morgan Zenner