The Remodeling Market Index (RMI) reached 55 in the fourth quarter of 2012, increasing five points from the previous quarter, according to the National Association of Home Builders (NAHB). This is the highest reading since the first quarter 2004.

An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity. 

"Remodelers are optimistic about the outlook for slow and steady market growth in the new year," said 2013 NAHB Remodelers Chairman Bill Shaw, GMR, GMB, CGP, a remodeler from Houston. "Professional remodelers reported more work from large and small projects as well as overall home repair."

Future market indicators increased from 49 in the previous quarter to 56. Current market conditions also showed improvement, rising from 52 in the previous quarter to 54.  Remodelers indicated that activity was particularly strong in owner-occupied properties, rating all categories of remodeling in owner-occupied homes 56 or better.

"With existing home sales up, the increase in the RMI partially reflects the remodeling work new home owners undertake when they move in," said NAHB Chief Economist David Crowe. "Consumers are gaining confidence in the economy and feeling more comfortable pulling the trigger on large and small renovations."

The RMI was above 50 in all four regions of the country. The RMI in the Northeast surged 24 points, primarily due to the start of remodeling work related to Superstorm Sandy damage.

For more information about remodeling, visit www.nahb.org/remodel.