NARI Remodelers Forecasting Double Digit Growth in 2016
by Fred Miller
Conducted in December, results from the National Association of the Remodeling Industry’s (NARI) fourth-quarter 2015 NARI Remodeling Business Pulse (RBP) data of current and future remodeling business conditions show strong expectations of growth in 2016.
NARI remodelers were asked for their projected sales change for 2016. Results were surprisingly strong, with a projected average change of +13.1%. Eighty percent of remodelers expect some level of growth in 2016 versus only 10% seeing any level of decline.
These same remodelers were also asked to rate sales in the first quarter of 2016 versus the same time last year. On a 1 to 9 scale, the average rating was 5.98 a significant decline from last year’s rating of 6.32 (ratings above 5 indicates growth).
This still points to growth, but at a slower rate than in 2015. The majority (58%) of remodelers expect some level of growth in the first quarter, while only 14% see declines (the balance see unchanged sales). As has been true for a number of waves of this study, postponed projects are the most important growth driver. Economic growth and increasing home prices tied for the number two driver of growth.
Looking at current conditions, the average rating was a 6.05. This was virtually unchanged from the 6.03 recorded in September’s study.
NARI remodelers rated four sub-components of the current conditions. Ratings for ‘Number of inquiries’, ‘Requests for bids’, and ‘Conversion from bids to jobs’ all experienced directional declines and were in a tight range of 5.73 – 5.75. The only area that didn’t decline was ‘Sales value of jobs.’ At 6.21 that measure edged up slightly from September and is the strongest factor in current sales. Larger remodeling projects are the key area of strength.
- ‘Number of inquiries’ was at 5.73, down 4.8%
- ‘Requests for bids’ came in at 5.77, down 4.6 %.
- ‘Conversion of bids to jobs’ was 5.75, down 1.0%.
- ‘Value of jobs’ was 6.21 a 0.3% increase.
Some of the comments made by survey respondents provide a sense to what they are thinking. A NARI remodeler from Minnesota said, “I think sales next year will be much better. This month alone I had at least twice as many inquiries and signed 5 design agreements when normally I don’t sign any design agreements in December. All the agreements are for large projects.”
A Missouri NARI member said, “In our market, there simply tends to be a high demand for new and improved housing. Pent up demand is the driving force for much of it.” A NARI member contractor put it simply, “Projects appear to be larger.”
About the author: For the past 18 years, Fred Miller has been President of Consumer Specialists and a leading consultant in the $300 billion home improvement market. From 1998 through the first quarter of 2015, his consulting has included serving as Managing Director of the Home Improvement Research Institute (HIRI). Consumer Specialist conducts the Remodeling Business Pulse survey and NARI Remodeler Member Profile on behalf of NARI.
| 1/15/2016 12:00:00 AM