Zonda’s Residential Remodeling Index (RRI) fell on a quarter-over-quarter basis for the first time since 2011 in the first quarter of 2023. According to Zonda, the sequential decline marks the beginning of a projected moderate cyclical downturn in the overall remodeling and replacement sector.
Despite the decline, the RRI reading of 164.8 indicates the current level of overall remodeling activity is 64.8% higher than the baseline year of 2007. The reading marks a 2.6% increase on a year-over-year basis, but is sequentially 0.7% lower than the fourth quarter of 2022.
Zonda projects the RRI will experience year-over-year declines from the second quarter of 2023 through the third quarter of 2025. On an annual basis, the index is forecast to decrease by 1.1% in 2023, 2.8% in 2024, and 0.5% in 2025. While growth will be negative on a year-over-year basis, the elevated level of remodeling activity during the COVID-19 pandemic will mean overall activity will still hover around 60% higher than the 2007 baseline. Zonda says the decreases are due to expected corrections in home prices and an economic slowdown; the risk of recession is “still high,” according to the company.Read More