Renewed homeowner interest in undertaking home renovation projects has boosted remodelers’ optimism that demand for their services will rebound in the third quarter. Activity began to improve in the latter part of the second quarter as some states started opening up businesses and relaxing stay-at-home orders.

An increase in project inquiries is driving expectations for an even better third quarter. But with some cities and states reinstating closures and lockdowns due to renewed outbreaks of the COVID-19 virus, the outlook at present is more uncertain.

Market conditions for remodelers have improved substantially since March and April, finds the National Association of Home Builders. Its Remodeling Market Index (RMI) for the second quarter came soaring back at 73 after plummeting to 24 in the previous poll. On average, members rated current business conditions at 77 and future indicators at 70, both well within “good” territory.

Remodelers and contractors responding to the Q3 2020 Houzz Renovation Barometer survey reported recent business activity in the second quarter had increased only slightly from the first quarter, but that their expected business activity in the third quarter was a solid reading of 75, compared to 18 the quarter before. Overall, they exuded confidence that the worst was behind them. Their outlook for how the sector would perform over the entire year improved from 66 to 82.

Heading into the third quarter, the most recent Pulse survey from the National Kitchen & Bath Association, released on July 9, shows conditions improving but at a slower pace than anticipated. It recorded an overall rating of the pandemic’s impact of 6.4, nearly the same as the 6.5 for June.

Some sectors reported more improvement than others, with builders and construction professionals seeing a lessening of an impact on their business, while manufacturers and designers said the impact had increased somewhat. Among the latter group, just 37% said demand for their services was on the rise (down from 43% the previous month). The decline was attributed to an increase in DIY and smaller quick-fix projects, facilitated by homeowners being able to do their own shopping again.

Taking the longer view, the latest forecast of the Leading Indicator of Remodeling Activity (LIRA) from the Remodeling Futures Program at Joint Center for Housing Studies of Harvard University (JCHS) projects annual declines in home renovation and repair spending throughout the remainder of this year and into the first half of next year, reaching only 0.4% by the second quarter of 2021. It expects that the current upward trend in activity will eventually taper off, with homeowners choosing to scale back, postpone and cancel major renovation projects as home sales flatten and unemployment remains high.

Another damper is surely to be the recent upswing in COVID-19 cases and deaths spreading across the country, causing officials to once again shut down some businesses and urge residents to stay at home as much as possible. Without doubt, the demand for remodeling services is real, but whether homeowners will feel comfortable undertaking projects in the midst of so much uncertainty is yet another challenge for the industry.