The U.S. Remodeler Index measures business sentiment of residential remodelers and home improvement professionals.
Remodelers and home improvement professionals nationwide remain extremely bullish about residential construction activity according to the latest U.S. Remodeler Index, a gauge of sentiment and remodeling activity conducted quarterly by Qualified Remodeler and John Burns Real Estate Consulting.
The most recent USRI release asked residential remodelers about the strength of their businesses today. For the fourth quarter of 2021, the aggregate reading was 68.4 on a scale where any reading over 50 is positive. Readings near 70 are considered strongly positive.
A full-report from the John Burns team found four key takeaways.
- Demand for whole-home remodels grows. Remodelers report robust demand for high-value whole-home and multiroom remodels, with project sizes continuing to expand overall in Q4, despite rapidly rising prices. Most remodelers (65 percent) say project sizes are still growing. Large, pro-heavy projects are less sensitive to inflation and benefit from structural demand drivers, while smaller projects are more sensitive to inflation and slowing income growth.
- Remodelers are flexing their price power. Although remodelers report double-digit inflation across nearly every product category, the vast majority are raising prices to protect their profit margins. The average remodeler successfully raised prices by 16 percent in 2021, with nearly one-third raising their prices by more than 25 percent, offsetting rising costs of product, materials, and labor. Steep increases in product costs have led some consumers to hit pause on their projects.
- Supply constraints weigh on overall remodeling activity, pushing demand out to the future. Remodelers say product lead times and labor shortages are getting worse, pushing completion dates out even further. 61 percent of remodelers report that projects are taking longer to complete in Q4 than Q3. Product availability remains a top concern, with both consumers and remodelers prioritizing availability over brand preference.
- Remodelers are optimistic about 2022 revenue growth despite increasing project delays and deferments. Although some consumers have deferred their projects amid rapidly rising prices and pandemic uncertainty, remodelers are confident that continued demand for whole-home upgrades and large-scale, multiroom projects will drive revenue growth in 2022. Design-build firms are expecting 11 percent growth on average, with full-service remodelers and home improvement pros each expecting 7 percent.