WASHINGTON – A rising number of Americans are preparing to renovate their homes this year, a potential boost for the economy, according to projections released Thursday by Harvard University’s Joint Center for Housing Studies.
The report estimates that spending on remodeling and repairs will climb 8.6 per cent this year to $310 billion. The gains would bring renovations close to the 2006 peak of an inflation-adjusted $327 billion.
The additional spending would likely contribute to broader economic growth, creating more jobs for construction workers and building supply firms.
Driving the increased spending on contractors are rising home sales: The home renovators include both people preparing to put their homes on the market and new owners seeking to customize their homes.
The projected rise also indicates that existing homeowners are upgrading kitchens and bathrooms, rather than focusing on necessary repairs for roofs.
“So long as we’re seeing growth in sales and prices, that should be contributing to remodeling activity,” said Abbe Will, a research analyst at the housing centre.
Existing homes sold at an annual rate of 5.33 million in March, up 1.5 per cent from a year ago, the National Association of Realtors said Wednesday. The median sales price rose 5.7 per cent over the past year to $222,700.
The findings appear a bit more optimistic than the results of another remodeling index released this week by BuildZoom, an online market for contractors, and the Massachusetts Institute of Technology’s Urban Economics Lab.
The BuildZoom index, which also studies how intensively a home is remodeled, rose 2.6 per cent last year, compared with the 4.4 per cent measured by Harvard’s housing centre.
The Chicago, New York, Phoenix and San Jose, California metro areas all reported double-digit growth in permits for renovations, while Las Vegas experienced a dip, according to the BuildZoom index.
Despite the increased activity, remodeling remains below the 2005 peak measured by the BuildZoom index.
“We’re not yet at that level of mania where we were during the housing boom,” said Issi Romem, the company’s chief economist.