DEMAND FOR REMODELING PROJECTS SLOWS

Remodeling activity increased slightly for renter-occupied housing units but declined overall during the second quarter of 2006, according to the National Association of Home Builders' (NAHB) Remodeling Market Index (RMI).

The current market conditions index, based on current home additions, alterations and repairs, decreased from 48.1 to 45.6, while the future expectations index, determined by the amount of work committed for the next three months and the backlog of remodeling jobs, slipped from 48.9 to 43.5.

Both indexes are measured on a scale of zero to 100, and numbers above 50 indicate improving market conditions.

The RMI declined nationwide last quarter, but remained highest in the West, where the current market conditions and future expectations components stood at 49.7 and 50.5, respectively.As home sales slow, a lower level of remodeling activity is expected; however, changes in the remodeling market tend to be more stable because many home modifications are for maintenance and repair purposes, according to the report.

"The average age of the housing stock is 32 years and rising -- well past the time when major home systems need replacement. Supported by more than $11 trillion in homeowner equity, the fundamentals of the remodeling market will remain strong for the foreseeable future," said NAHB Chief Economist David Seiders.

**Taken from the California Association of Realtors Bulletin, dated August 23rd, 2006.