by Fred Miller
Conducted in March, the first-quarter 2016 NARI Remodeling Business Pulse (RBP) data of current and future remodeling business conditions point to growth, but at a moderate rate.
- Current Conditions
When asked to rate current business conditions compared to the same time last year, the average rating was a 5.84 on a 9 point scale. (5= about the same as last year, 1= much worse than last year and 9= much better than last year) While this was down from December’s RBP, the 3.5% drop was not statistically significant.
Digging deeper into the current situation, NARI remodelers were asked about four underlying subcomponents. Results were mixed in March; two up and two down. Directional increases in ‘Number of inquiries’ and ‘Requests for bids’. ‘Conversion of bids to jobs’ had a significant decline and ‘Value of jobs sold’ fell directionally. Here are the ratings and the change versus the December study:
• ‘Number of inquiries’ was at 5.96, up 4.0%
• ‘Requests for bids’ came in at 5.92, up 2.6%.
• ‘Conversion of bids to jobs’ was 5.44, down 5.4%.
• ‘Value of jobs’ was 6.03 a decline of 2.9%.
It appears that the softening in the current business is due to difficulty converting bids to jobs and projects being of a smaller size.
- Future Conditions
Survey respondents were also asked to rate sales in the second quarter of 2016 versus the same time last year. On the same scale, the average rating was 6.21 a significant decline from last year’s rating of 6.46. This result continues to point to growth, but at a slower rate than in 2015.
The dominant majority (70%) of remodelers expect some level of growth in the second quarter, while only 9% see declines (the balance see unchanged sales). Growth is evident, but just at a slower rate.
When asked about what is driving growth, homeowners doing projects that had previously been postponed was the leading response. Increasing home prices was the #2 response. Both of these factors were somewhat more common in March than a year-ago.
- Remodeler Comments
From a New York NARI member, “I feel that the economy is improving due to the increase in consumer confidence. Consumers were postponing projects because of the insecurity of employment. I believe that the consumer’s attitude is improving, thus yielding the improved forecast.”
The need to do work, but the hesitancy in making the final decision is clearly stated by an Illinois NARI remodeler, “Desire is strong, spending the money is reserved.”
Viewed as a whole, the March RBP shows that there is good continued interest in doing remodeling projects that will lead to moderate growth. Key headwinds from the consumer side include, getting homeowners comfortable with making the decision to proceed and overcoming their resistance to undertaking larger projects.