Remodeling and replacement project activity declined 1% nationally during the first quarter of 2011 from the last three months of 2010, according to Hanley Wood's Residential Remodeling Index (RRI). The decrease in activity continues a downward trend started during fourth quarter 2010, prior to which activity had been on the move up.
The RRI's seasonally adjusted first quarter national composite was a score of 77.41, compared to the score of 78.46 during the quarter prior. Prior to the last quarter of 2010, the RRI had been improving for the first time since 2007, with 1% increases quarter over quarter during the first half of the year. From peak to trough, remodeling activity declined 22%, according to the RRI. With the results, Hanley Wood now predicts remodeling activity will decline further over the next two quarters before beginning to move up in 2011 and 2012.
"Essentially, what the RRI is revealing is that remodeling and replacement is continuing to experience a slight decline when we look at the aggregation of activity nationally," said Jonathan Smoke, Hanley Wood's executive director of research. "We had hoped that our previously flat forecast expectations would have been revised upward as 2011 seemed to start with much more positive economic expectations than we had in late 2010. But, the short term expectations for the U.S. economy have only grown more pessimistic lately."
The RRI is a quarterly measure of the level of remodeling activity in 366 metropolitan areas around the country. The national composite reflects the national level of activity, which includes home improvement and replacement projects of more than $500. A number above 100 indicates a level of activity greater than the level of activity at the beginning of 2007, which was the peak of remodeling activity during the first decade of the 2000s.