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Remodeling Market Sentiment Remains in Positive Territory in Second Quarter – Eye On Housing

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In the second quarter of 2026, the NAHB Remodeling Market Index (RMI) posted a reading of 61, down one point compared to the previous quarter. The RMI has remained in the low 60s consistently over the past year.

Even with this slight decline from the previous quarter, remodeler sentiment remains the standout sector within the housing industry, outperforming both its single-family and multifamily counterparts.  

With current mortgage rates above the median outstanding rate for existing homeowners, the incentive to remodel instead of purchasing a new home given the low levels of existing inventory persists due to this lock-in effect. Additionally, homeowners are sitting on record high real estate asset gains which they are able to tap into making it easier to fund remodeling projects. However, ongoing economic uncertainty and current cost pressures due to inflation are causing project delays, especially for larger ones. In the latest RMI survey, 74% of remodelers reported that their suppliers have increased prices of materials since March due to higher fuel costs, with the average increase in materials prices over that span being 6.7%. 

Nevertheless, based on the positive sentiment from the RMI and structural demand tailwinds, NAHB’s forecast for remodeling spending remains robust both in the short-term and over the long run.

The RMI is based on a survey that asks remodelers to rate various aspects of the residential remodeling market “good”, “fair” or “poor.” Responses from each question are converted to an index that lies on a scale from 0 to 100. An index number above 50 indicates a higher proportion of respondents view conditions as good rather than poor.

Current Conditions

The Remodeling Market Index (RMI) is an average of two major component indices: the Current Conditions Index and the Future Indicators Index. 

The Current Conditions Index is an average of three components: the current market for large remodeling projects ($50,000 or more), moderately-sized projects ($20,000 to $49,999), and small projects (under $20,000).

In the second quarter of 2026, the Current Conditions Index averaged 70, unchanged from the previous quarter. The component measuring moderately-sized remodeling projects increased four points to 73, while the small projects component remained unchanged at 74 and the large projects component decreased three points to 64. 

Future Indicators

The Future Indicators Index is an average of two components: the current rate at which leads and inquiries are coming in, and the current backlog of remodeling projects.

In the second quarter of 2026, the Future Indicators Index averaged 52, down two points from the previous quarter. Both components decreased quarter-over-quarter but still remain above the break-even point of 50. The component measuring backlog of remodeling jobs was down two points to 54, while the component measuring the current rate at which leads and inquiries are coming in edged down one point to 51.

For the full set of RMI tables, including regional indices and a complete history for each RMI component, please visit NAHB’s RMI web page.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Builder Sentiment Remains Weak Amid Affordability Concerns – Eye On Housing

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Builder sentiment remains subdued as rising material costs, elevated mortgage rates and ongoing affordability challenges continue to strain the housing market.

Builder confidence in the market for newly built single-family homes fell two points to 35 in June, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the 14th straight month that sentiment has remained below 40, a streak not seen since 2011-2012 during the foreclosure crisis.

Costly and inefficient regulatory policy is clearly impeding the ability of builders to increase the housing supply. According to a new NAHB study, government regulation, taxes, fees and other costs add more than 26% to the price of an average single-family home. Easing permitting bottlenecks, density limits and inefficient zoning rules would help reduce costs and support the housing growth the nation needs.

The latest HMI survey also revealed that 35% of builders cut prices in June, up from 32% in May. The average price reduction was 6% in June, the same rate as the previous month. The use of sales incentives was 62% in June, up slightly from 61% in May, and marking the 15th consecutive month this share has reached 60% or higher.

Derived from a monthly survey that NAHB has been conducting for more than 40 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI index gauging current sales conditions fell two points to 38 in June, the index measuring future sales held steady at 45 and the index charting traffic of prospective buyers remained unchanged at 25.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 44, the Midwest held constant at 43, the South fell two points to 33 and the West dropped one point to 27. The HMI tables can be found at nahb.org/hmi.

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This article was originally published by a eyeonhousing.org . Read the Original article here. .

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U.S. Labor Market Remains Resilient in May – Eye On Housing

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Despite rising inflation and ongoing economic uncertainty, the U.S. labor market remained resilient in May. Nonfarm payrolls increased for the third consecutive month, and the unemployment rate held steady at 4.3%. Job gains were concentrated in leisure and hospitality, local government, and health care, while financial activities experienced a decline in payroll employment.

Wage growth moderated in May, with average hourly earnings rising 3.4% year-over-year. This pace is 0.5 percentage points lower than a year ago. Importantly, wage growth has been outpacing inflation for nearly two years, which typically occurs as productivity increases.

National Employment

According to the Employment Situation Summary reported by the Bureau of Labor Statistics (BLS), total nonfarm payroll employment increased by 172,000 in May, following an upwardly revised gain of 179,000 jobs in April. This marked the third consecutive month of job gains following a period of volatile payroll growth.

Employment gains for the previous two months were revised higher. The monthly change in total nonfarm payroll employment for March was revised upward by 29,000 from +185,000 to +214,000, while the change for April was revised upward by 64,000 from +115,000 to +179,000. Combined, these revisions added 93,000 more jobs than previously reported.

Job growth in early 2026 has improved notably compared with 2025 but has yet to fully match the pace observed in 2024. Through May, monthly payroll gains have averaged 114,000, compared with 10,000 per month in 2025 and 122,000 per month in 2024.

The unemployment rate remained unchanged at 4.3% in May. Over the month, the number of persons unemployed declined by 66,000, while the number of persons employed rose by 149,000.

Meanwhile, the labor force participation rate—the proportion of the population either looking for a job or already holding a job—remained unchanged at 61.8%. This marks the lowest level since November 2021 and remains below its pre-pandemic level of 63.3% recorded at the beginning of 2020. Among prime working-age individuals (aged 25 to 54), the participation rate rose 0.1 percentage points to 83.9%.

Job gains in May were slightly more broad-based than in recent months. Employment increased by 70,000 in leisure and hospitality, 55,000 in local government, and 35,000 in health care. In contrast, employment in financial activities declined by 22,000 and has fallen by 107,000 since its recent peak in May 2025. Federal government employment, which experienced a sharp decline last fall, increased modestly by 1,000 jobs in May.

Construction Employment

Employment in the overall construction sector rose by 17,000 jobs in May, following a gain of 9,000 in April. Within the industry, residential construction added 900 jobs, while non-residential construction added 15,700 jobs.

Residential construction employment now stands at 3.3 million in May, including 925,000 workers employed by builders and remodelers and nearly 2.4 million residential specialty trade contractors.

Despite the monthly gain, residential construction employment continues to show signs of weakness. The six-month moving average of job gains for residential construction remains negative, reflecting an average monthly loss of 1,300 jobs and declines in three of the past six months. Meanwhile, over the last 12 months, residential construction has shed a net of 33,300 jobs, marking the fifteenth consecutive annual decline and the longest stretch of annual losses since the Great Recession. However, residential construction has gained 1,303,900 positions from its post-Great Recession low.

Meanwhile, the unemployment rate for construction workers rose to 5.2% in May on a seasonally adjusted basis, though it remains relatively low compared with historical norms.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Mortgage Rates Increase Further as Inflation Remains Elevated – Eye On Housing

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Mortgage rates continued to increase in May as inflation accelerated. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.41% in May, up 7 basis points (bps) over April. Since the conflict in the Middle East began, the 30-year mortgage rate has increased by 36 basis points. The average 15-year rate averaged 5.76% in May, up 7 bps from April, and up 33 basis points since the end of February. Even so, both rates remain lower than a year ago by 41 bps and 19 bps, respectively.

The 10-year Treasury yield, a key benchmark for long-term borrowing, averaged 4.47% in May, 16 bps higher than the previous month. Stronger-than-expected inflation pushed yields upward, with the 10-year yield reaching as high as 4.6% during the month. Rising energy prices kept inflation high, as fuel oil prices increased 5.8% and gasoline prices rose 5.4%.

Persistently high inflation has also strained household budgets. As people used more of their disposable income or drew down on savings to cover everyday expenses, the personal saving rate fell to 2.6% in April. The rate was the lowest since June 2022 when CPI was at its peak.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Rent Prices Continue to Rise, While Absorption Remains Low – Eye On Housing

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The percentage of new apartment units that were absorbed within three months after completion was up one percentage point in the fourth quarter, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA). The survey covers new units in multifamily residential buildings with five or more units. The number of new multifamily units completed was 77,380 in the fourth quarter, the lowest quarterly completions since the second quarter of 2022 (76,630).

Apartments

The percentage of apartments absorbed within three months after completion was 49% for those completed in the fourth quarter of 2025. This was the sixth consecutive quarter for which new apartments were absorbed at a rate below 50%. The median asking rent for apartments completed in the fourth quarter was $2,034, up 4.5% from $1,946 last year. This also marks the first quarter where the median asking rent topped $2,000.

Along with the three-month absorption rate and completions, SOMA also reports absorption rates at six, nine, and twelve months after completion. For apartments completed six months ago (97,210 units), 68% have been absorbed into the market. For apartments completed (93,140 units) nine months ago, 80% have been absorbed. For those completed twelve months ago (92,760 units), 90% have been absorbed into the multifamily market.

Condominiums and Cooperative Units

The three-month absorption rate for new condominiums and cooperative units rose to 70%. Total completions of new condominiums and cooperative units, according to SOMA, was 4,831 in the fourth quarter of 2025.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Remodeling Market Sentiment Edges Down but Remains Positive in First Quarter – Eye On

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In the first quarter of 2026, the NAHB/Westlake Royal Remodeling Market Index (RMI) posted a reading of 62, down two points compared to the previous quarter. Despite this decline, the overall reading has been solidly in positive territory since Q1 2020.

Remodeler sentiment remained generally positive in the first quarter, even as many remodelers are still working to manage their customers’ cost expectations. Only a relatively small share report homeowners putting projects on hold due to economic and political uncertainty.

Ongoing positive remodeler sentiment is consistent with NAHB’s outlook, given an aging housing stock and the lock-in effect of elevated mortgage rates keeping owners in the homes longer. In the first quarter, remodelers reported 21% of their projects were associated with home improvements made shortly after a purchase, while only 4% were for homeowners’ projected to ready a home for sale.

The RMI is based on a survey that asks remodelers to rate various aspects of the residential remodeling market “good”, “fair” or “poor.” Responses from each question are converted to an index that lies on a scale from 0 to 100. An index number above 50 indicates a higher proportion of respondents view conditions as good rather than poor.

Current Conditions

The Remodeling Market Index (RMI) is an average of two major component indices: the Current Conditions Index and the Future Indicators Index. 

The Current Conditions Index is an average of three components: the current market for large remodeling projects ($50,000 or more), moderately-sized projects ($20,000 to $49,999), and small projects (under $20,000). In the first quarter of 2026, the Current Conditions Index averaged 70, edging down one point from the previous quarter. All three components remained well above 50 in positive territory. The component measuring small remodeling projects was the only one to experience a quarterly gain, inching up one point to 74. Both the moderate and large remodeling projects components were down two points to 69 and 67, respectively.

Future Indicators

The Future Indicators Index is an average of two components: the current rate at which leads and inquiries are coming in, and the current backlog of remodeling projects. 

In the first quarter of 2026, the Future Indicators Index averaged 54, down two points from the previous quarter. Both components decreased quarter-over-quarter but are above the break-even point of 50. The component measuring the current rate at which leads and inquiries are coming in edged down one point to 53, while the component measuring backlog of remodeling jobs dropped three points to 58.

For the full set of RMI tables, including regional indices and a complete history for each RMI component, please visit NAHB’s RMI web page.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Demolition Activity Slows Down But Remains Above Pre-Pandemic Levels – Eye On Housing

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Residential demolition activity in 2025 declined 0.1% year-over-year but remained above pre-pandemic levels. According to NAHB analysis of data from Construction Monitor, permits pulled for residential demolition have been increasing since 2018, with the exception of 2020, when building-related activities broadly stalled. Demolition activity rebounded sharply in 2021 and 2022 but has since plateaued. Even with the recent stall, demolition permits in 2025 were still 34.2% higher than in 2018, underscoring the extent to which activity remains elevated relative to pre-pandemic norms.

While the data do not differentiate between partial or full demolitions, teardowns are often an indicator of redevelopment and neighborhood reinvestment, and thus, signals future construction. Previous NAHB survey analysis indicated that teardown-related construction projects made up approximately 7% of single-family starts in 2024.

At the state level, demolition activity is highly concentrated, with California, Texas, and Florida—the three most populous states—usually leading the nation in demolition permits. However, from 2023 through 2025, New Jersey ranked third in total demolition permits, surpassing Texas. New Jersey’s elevated demolition activity reflects the age of its housing stock. Approximately 73% of homes in the state were built before 1980, out of which 18% were built before 1939, leaving many properties functionally obsolete or in need of replacement. In response, several municipalities have pursued targeted redevelopment and blight reduction initiatives. For example, Trenton, the capital city, launched one of its largest blight reduction projects in 2023, aimed at revitalizing distressed neighborhoods and expanding the supply of quality housing.

In 2025, New Jersey accounted for approximately 10.4% of all residential demolition permits nationwide. Florida recorded the largest share at 14.6%, followed by California at 13.3%. Texas remained a significant contributor at 7.2%, while New York ranked fifth with about 4.1% of total activity. Collectively, the top five states accounted for nearly half of all residential demolition permits issued in 2025, highlighting the high degree of geographic concentration at the state level.

At a smaller geographic scale, the year-to-year variability is substantially higher. To account for this volatility, examining cumulative demolition permitting since 2018 provides insight into where demolition activity has been persistently concentrated over the current cycle. On this basis, Los Angeles County, CA accounted for the largest share of cumulative demolition permits (4.8%), followed by Harris County, TX (3.1%), Cuyahoga County, OH (2.6%), King County, WA (2.0%), and Miami-Dade County, FL (1.8%). Together, these five counties accounted for nearly 15% of all demolition activity nationwide over the period.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Building Material Price Growth Remains Entrenched Above 3% – Eye On Housing

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Residential building material price growth accelerated in February after slowing a month prior, according to the latest Producer Price Index release from the Bureau of Labor Statistics. Since the BLS collects pricing data during the week of the 13th, these figures were finalized before the onset of the conflict in Iran.

The Producer Price Index for final demand increased 0.7% in February, after rising 0.5% in January. The index for final demand services rose 0.5% in February, while the index for final demand goods rose 1.1% over the month. The monthly increase in the index for final demand goods was the largest since it rose 1.6% back in August of 2023.

The price index for inputs to new residential construction rose 0.7% in February and was up 3.4% from last year. The price of goods used in new residential construction was up 1.1% over the month and 3.0% from last year, while the price of services was up 0.1% over the month and up 4.2% from last year.

Input Goods

The goods component has a larger importance to the inputs to residential construction price index, representing around 60%. On a monthly basis, the price of input goods to new residential construction was up 1.1% in February. The last time this index increased over 1.0% on a monthly basis was January of 2025.

The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring remaining goods. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index.

Energy input prices rose 9.3% in February but were 3.5% lower than one year ago. Building material prices were up 0.6% in February and up 3.5% compared to one year ago.

The largest year-over-year price increases continue to show in metal products with the largest being for metal molding and trim, as prices are now up 61.7% from a year ago. Metal windows price growth has continued to accelerate with prices up 20.2% from last year. Across all metals and metal products, prices are up 16.6% from last year. Yearly price declines were prevalent among energy products, due to the timing of the survey. For building materials, particleboard and fiberboard prices were down 17.4%, while softwood veneer and plywood prices were down 4.0%.

Input Services

Prices for service inputs to residential construction reported an increase of 0.1% in February. On a year-over-year basis, service input prices were up 4.2%. The price index for service inputs to residential construction can be broken out into three separate components: a trade services component, a transportation and warehousing services component, and a services excluding trade, transportation, and warehousing component (other services).

The most significant component is trade services (around 60%), followed by other services (around 29%), and finally transportation and warehousing services (around 11%). The largest component, trade services, was up 5.8% from a year ago. The transportation and warehousing services rose 3.0%, while prices for other services were up 1.3% over the year.

Expanded Inputs to New Construction Data

Within the PPI that BLS publishes, new experimental data was recently published regarding inputs to new construction. The data expands existing inputs to industry indexes by incorporating import prices with prices for domestically produced goods and services. With this additional data, users can track how industry input costs are changing among domestically produced products and imported products. This data focuses on new construction, but the complete dataset includes indices across numerous industries that can be found here on BLS website.

New construction input prices are primarily influenced by domestically produced goods and services, with domestic products accounting for 90% of the weight of the industry index for new construction. Imported goods make up the remaining 10% of the index.

The latest available data, for December 2025, showed that domestically produced goods continue to show price growth compared to imported goods used in new construction. On a year-over-year basis, the index for domestic goods increased 3.0%, while prices for imported goods have fallen 3.2%.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Multifamily Absorption Rate Remains Below 50% – Eye On Housing

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The percentage of new apartment units that were absorbed within three months after completion was unchanged for new units completed in the second quarter, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA). The survey covers new units in multifamily residential buildings with five or more units. The number of new multifamily units completed rose marginally in the second quarter and remained above 90,000 units for the seventh consecutive quarter.

Apartments

The percentage of apartments absorbed within three months has remained below 50% for four straight quarters. The SOMA data has never featured more than two consecutive quarters with under 50% absorption rates. Currently, the rate stands at 47%, meaning that 47% of the 93,680 units completed in the second quarter were rented within three months of completion. The median asking rent in the second quarter was $1,860, up 5.3% from $1,766 last year. The SOMA data has also displayed two quarters of median rent declines, as the asking rent has fallen from $1,941 for completions in the fourth quarter of 2024.

Along with the three-month absorption rate and completions, SOMA also reports absorption rates at six, nine, and twelve months after completion. For apartments completed six months ago (93,400 units), 70% have been absorbed into the market. Of the 125,100 apartments completed nine months ago, 85% have been absorbed. For those completed twelve months ago (142,700 units), 91% were absorbed into the multifamily market.

Condominiums and Cooperative Units

The three-month absorption rate for new condominiums and cooperative units rose to 69%. Total completions of new condominiums and cooperative units, according to SOMA, doubled in the second quarter from 2,551 to 5,167.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Fed Remains on Pause Again

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At the conclusion of its July meeting, the Federal Reserve’s monetary policy committee once again held the federal funds rate constant at a top rate of 4.5%. However, two members of the committee dissented from the decision (Fed Board Governors Waller and Bowman), the largest number of dissenting votes since 1993.

Moreover, some economic data – including a slowing housing market – are pointing to a need to resume normalizing the federal funds rate from its current, restrictive stance. In particular, Chair Powell noted in his press conference that the “housing market remains weak” and policy is “modestly restrictive.” NAHB is forecasting two rate reductions before the end of the year, including one at the next Fed meeting in September. President Trump has made it clear that he believes the central bank needs to cut again. All that said, except for the presence of dissenting votes in today’s decision, the Fed’s statement did not appear to be more dovish than those of prior months, which is indicative that the Fed remains data dependent.

While the Fed pointed to moderating growth, including a soft first quarter, “elevated uncertainty” about the outlook continues to be cited by the central bank. It is the case that evolving tariff policy, and trade negotiations in general, represent an uncertainty risk (although some, like Governor Waller, argue that tariff effects will represent a one-time effect on prices, not a source of ongoing inflation).

However, the combination of a quick move for cuts at the end of 2024 and the subsequent long, ongoing pause in 2025 is itself a source of uncertainty, particularly for businesses in sectors like residential construction whose financing costs are tied to short-term lending rates controlled by the Federal Reserve. The continued decline for service sector inflation points to moderating overall inflation, which when combined with softening job openings data and growing specifics about trade policy, provides justification for a resumption of continued monetary policy easing.

While a reduction in the federal funds rate would help the supply-side of the housing market via builder financing costs, long-term rates like mortgage interest rates are determined by investors and the bond market, not the Fed. So, while the economy would benefit from a resumption of monetary policy easing, impactful reductions for long-term interest rates depends on declines for inflation expectations, improvement of the government’s deficit outlook, and gains for productivity for the economy.

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