The home improvement industry gained momentum in the third quarter, according to analysts, but the elections, economy and effects of Hurricane Sandy could lead to tumult in the fourth.
The outlook for the remodeling industry improved in the third quarter of the year, but remodelers face a future “clouded by uncertainty” around the national economy, presidential election and the aftermath of Hurricane Sandy, according to a statement released today by the National Association of the Remodeling Industry, a trade group also known as NARI.
“Overall, NARI members are experiencing an upswing. However, the future paints a more mixed picture. Hurricane Sandy’s destruction will likely spur more activity on the East Coast,” Tom O’Grady, chairman of the NARI Strategic Planning and Research Committee.
Remodelers surveyed in September reflected a mixed outlook for business, indicating a high level of concern over economic and political uncertainty, according to the NARI third-quarter Remodeling Business Pulse. Unemployment and tight credit also weighed on sentiment. The more recent advent of Hurricane Sandy is assumed to “impact the remodeling industry on the East Coast next quarter as homeowners start to rebuild,” NARI said in today’s statement.
Drivers of remodeling growth over the third quarter included improving home prices and home owners who had postponed a home improvement project. According to O’Grady, “Pent-up demand continues to be a huge contributor to home improvement activity, particularly in those who are choosing to stay in homes longer term.”
Rising home values, affordability and low interest rates are also stimulating home sales, which in turn, increases demand for remodeling projects. Rising home sales could be a “significant driver” of remodeling activity in 2013.
Confidence reached a seven-year high among remodelers surveyed in the third quarter by the National Association of Home Builders. The association’s Remodeling Market Index (RMI) reached 50, up from 45 for the second quarter of 2012.
“The improvement in the RMI provides more evidence that the remodeling industry is making the orderly recovery from its low point in 2009 as we’ve been expecting,” David Crowe, the association’s chief economist said in a statement released last week.
Overall construction activity rose by 0.6 percent in the month of September, according to data released by the Commerce Department today. Construction spending for the first three quarters of 2012 totaled $624.8 billion, an 8.9 percent increase for the same period in 2011. Private construction rose 1.3 percent in September, though public construction spending fell 0.8 percent.