Remodeling Market Headed to Recovery

National Association of Home Builders Remodeling Market Index climbed in the first quarter of 2011 to its highest level in the past five years - additional evidence of a rosier outlook for the home improvement sector. RMI is based on a quarterly survey of professional remodelers, whose answers to a series of questions were assigned numerical values to calculate two separate indexes.

National Association of Home Builders Remodeling Market Index (RMI) increased to 46.5 for the first quarter of 2011 from its previous reading of 41.5 at the end of 2010. This is the highest level for the RMI since the end of 2006.

However, the fact that the RMI remains below 50 indicates that still more remodelers report activity is lower than report it is higher (compared to the previous quarter).

RMI fell to a low of 22.1 in late 2008 during the height of the financial crisis. After that period, two tax credits (the Internal Revenue Code Section 25C remodeling credit and the 25D solar and other power production tax credit) likely provided a significant boost to the marketplace.

The current release of the RMI also contained a special question asking remodelers to report the top reasons prospective customers are holding back from remodeling their homes.

- Courtesy of NAHB