The NAHB/Westlake Royal Remodeling Market Index (RMI) for the third quarter of 2024 posted a reading of 63, down two points compared to the previous quarter.
Remodelers remain optimistic about the market even though the overall RMI edged down for the third consecutive quarter. Some have potential customers citing the upcoming election as a reason for putting large projects on hold. Remodelers also continue to face various headwinds such as difficulty finding skilled construction labor and higher interest rates. Nevertheless, the overall RMI reading of 63 is consistent with NAHB’s forecast for steady 2% growth in remodeling spending over the next two years.
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 subcomponents: 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 third quarter of 2024, the Current Conditions Index averaged 72, declining one point from the previous quarter. All three components remained well above 50 in positive territory: the component measuring small-sized remodeling projects (under $20,000) rose two points to 77, while both the component measuring moderate remodeling projects (at least $20,000 but less than $50,000) and the component measuring large remodeling projects ($50,000 or more) fell three points to 71 and 67, respectively.
Future Indicators
The Future Indicators Index is an average of two subcomponents: the current rate at which leads and inquiries are coming in and the current backlog of remodeling projects.
In the third quarter of 2024, the Future Indicators Index was 55, down three points from the previous quarter. Quarter-over-quarter, the component measuring the backlog of remodeling jobs fell three points to 57 and the component measuring the current rate at which leads and inquiries are coming in dropped two points to 53.
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.
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First, let’s take a look at what’s often the first consideration when remodeling a bathroom: cost. As with many products and services, median spend on all bathroom remodels has risen — up 11%, from $13,500 in 2022 to $15,000 in 2023. The rise is due to an increase in the median spend for major remodels (in which at least the shower is upgraded) and minor remodels (those without a shower upgrade).
The median spend on major remodels rose 5%, from $20,000 in 2022 to $21,000 in 2023. Over the same period, the median spend on minor remodels increased from $8,000 to $8,500. For minor remodels of larger bathrooms (100 or more square feet), spend rose 15%, from $10,000 in 2022 to $11,500 in 2023. For minor remodels of smaller bathrooms (less than 100 square feet), spend rose 20% year over year, from $5,000 to $6,000.
Keep in mind, economists like to reference the median, or midpoint, figure rather than the average for this kind of data because the average can be skewed, can be volatile year over year and can be misleadingly high or low because of a single project that costs far more or less than others.