Trends in home remodeling are showing their greatest improvement in over four years, although tight credit and a lack of home equity continue to restrain demand.
The National Association of Home Builders reports that its Remodeling Market Index rose a full five points in the first quarter of the year, to 46.5, suggesting that a recovery is underway in the home improvements. It’s the highest the index has been since the fourth quarter of 2006.
“Remodelers report a jump in activity so far this year and have been receiving more calls for work and appointments,” said Bob Peterson, remodeling chairman for NAHB. “However, many home owners are still slow to commit to remodeling due to feeling uncertain about the economic recovery and difficulty obtaining loans.”
A score below 50 in the index still represents that more remodelers report declining activity than increases, compared to the previous quarter. However, the rise in the index is considered a promising sign, particularly since some individual indicators are edging into positive territory.
The index for major home additions rose to 50.3, up from 48.6 in the previous quarter, while several future indicators rose into positive territory as well. Calls for bids increased to 53.1 in the first quarter of 2011, up from 47.2, while appoints for proposals rose by more than nine points, to 52.4, up from 43.1 previously.
Difficulty in obtaining financing was seen as consumer’s main obstacle to remodeling, cited by 90 percent of respondents in the survey, followed by declining home equity, cited by 81 percent. Other reasons were consumer uncertainty about their own economic situations (74 percent) and doubts about investing in a home that may not hold its value (67 percent).