Used by permission of NAHB
Crossing the $200 billion threshold for the first time, residential remodeling activity in last year’s third quarter hit an estimated annual rate of $210 billion, according to NAHB analysis of spending statistics from the U.S. Census Bureau.
The association is now predicting that Americans will spend a record $238 billion this year remodeling their homes, a 13.2% jump that would be the sharpest in more than 10 years. Spending on home remodeling grew by 5.8% last year, in line with an average rate of 5.3% from 1994-2004.
“The devastating 2005 hurricanes and a rebound in the rental market are expected to spur a historically high increase in spending this year as repair work proceeds in the Gulf states and apartment owners renovate properties to maximize rental income,” said Vince Butler, CGR, CAPS, GMB, chair of NAHB’s Remodelors™ Council. “The massive owner equity and low refinance rates that fueled recent growth will continue to drive strong expansion.”
For every $100,000 spent on additions and alterations, the local community receives $54,200 in income, $4,900 in taxes and other government revenue and more than one local full-time job, according to an analysis by NAHB economists of the local economic impact of remodeling.
“The $200 billion remodeling industry is almost exclusively made up of small businesses that operate in local communities,” said Butler. “And we can now confirm that money spent on remodeling stays local.”
Regionally, the South accounted for 31% of all remodeling expenditures in 2004, the last full year of Census data, with an average of $1,513 spent per household. It was followed by the West, with a 23% share and $2,104 spending per household; the Northeast, with a 23% share and $2,185 spent per-household, the highest of any region; and the Midwest, accounting for 20% and registering $1,530 per household remodeling spending.
The residential remodeling market accounts for approximately 40% of all spending on home construction.
For more information, e-mail Jim Lapides at NAHB, or call him at 800-368-5242 x8451.