Spending stalled on remodeling in fourth quarter

Real Estate Watch

March 03, 2002

Spending on residential remodeling stagnated in the fourth quarter last year because of a slowing economy and rising unemployment, according to the National Association of Home Builders' Remodeling Market Index.

Despite a spending slowdown in the second half of last year, the NAHB expects remodeling expenditures for last year to total $161 billion, 5 percent more than in the previous year.

The RMI measures the current remodeling market and provides a snapshot of the future market through a survey of remodelers. In the fourth quarter, the RMI's current market index fell slightly, to 45, while its future market index fell nearly four points, to 42.8.

An index measure under 50 indicates that more than half of remodelers view market conditions as unfavorable, according to HBAM.

"We expected a slowdown in remodeling in the second half of 2001 due to the sluggish economy and rising unemployment," said Bill Owens, NAHB Remodelors Council chairman.

The HBAM survey found that the three most significant problems for remodelers last year - availability of skilled labor, labor costs and employee retention - were labor-related.

The companies expected such issues to remain their top concerns this year.

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