by Bill McBride on 10/17/2011 11:21:00 AM
Monday, October 17, 2011
The BuildFax Residential Remodeling Index was at 138.6 in August, up from 130.4 in July. This is based on the number of properties pulling residential construction permits in a given month.
The Residential BuildFax Remodeling Index rose 29% year-over-year--and for the twenty-second straight month--in August to 138.6. Residential remodels in August were significantly up month-over-month over 8 points (6.3%) from the July value of 130.4, and up year-over-year 31.2 points (29%) from the August 2010 value of 107.4.Click on graph for larger image in graph gallery.
In August, the West (11.9 points; 9.3%), Midwest (11.4 points; 10.8%), and South (1 point; 1%) all had month-over-month gains, while the Northeast (-.6 points; -.8%) saw a decline.
"As mortgage rates hit record lows, it is apparent that millions of Americans are refinancing their homes and using some of their new monthly savings to reinvest in their homes with remodeling projects," said Joe Emison, Vice President of Research and Development at BuildFax. "With remodeling activity growing at an estimated 9.5 percent in 2011 compared to 2010, this is one segment of the economy that is showing continued strength, even as other sectors struggle."
This is the highest level for the index (started in 2004) - even above the levels from 2004 through 2006 during the home equity ("home ATM") withdrawal boom.
Note: Permits are not adjusted by value, so this doesn't mean there is more money being spent, just more permit activity. Also some smaller remodeling projects are done without permits and the index will miss that activity.
Since there is a strong seasonal pattern for remodeling, the second graph shows the year-over-year change from the same month of the previous year.
The remodeling index is up 29% from August 2010. This is the highest year-over-year increase in activity since the index started.
Even though new home construction is still moving sideways, it appears that two other components of residential investment will increase in 2011: multi-family construction and home improvement.
Data Source: BuildFax, Courtesy of Index.BuildFax.com
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Posted by Bill McBride on 10/17/2011 11:21:00 AM