Americans Less Likely to Spend on Home Improvement When Home Prices are Low

American homeowners may not spend significantly on home improvements in the near future, according to report by the Wall Street Journal. Americans tend to spend more on home improvement as home prices rise, since they are likely to see a return on their investments.

November 02, 2010

American homeowners may not spend significantly on home improvements in the near future, according to report by the Wall Street Journal. Americans tend to spend more on home improvement as home prices rise, since they are likely to see a return on their investments.

As prices dropped over the last few years, however, homeowners tended to spend less at home improvement stores like Home Depot and Lowe’s. Greg Melich of ISI Group noted a correlation between home prices and the average price per item sold at these stores—as home prices dropped, shoppers opted for more inexpensive home improvements. Masco, a manufacturer of home improvement products, has seen lower sales numbers on pricier items like cabinets. Sales of “decorative architectural products,” like paint, remain stronger, since these items are needed whether a homeowner plans to sell or not.

Although home prices have risen in recent months, the housing market remains troubled, so homeowners are still unlikely to see a return on investment for any home improvements they make. In addition, Americans have little confidence in the real estate market—96 percent said it was a “bad time” to sell their homes in an October Credit Suisse survey.

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