Residential Remodeling Market Surges as U.S. Census Bureau Recomputes Its Statistical Data

The U.S. Census Bureau has made substantial upward revisions dating back to 1984 to its C-50 data series, Expenditures for Improvements and Repairs of Residential Properties.

September 30, 2000

Confirming field experts’ long-time beliefs that the remodeling market is much larger than officially reported, the U.S. Census Bureau has made substantial upward revisions dating back to 1984 to its C-50 data series, Expenditures for Improvements and Repairs of Residential Properties.

NAHB and Harvard University’s Joint Center for Housing Studies have been meeting with Census Bureau staff over the past several years to address the timeliness and the quality of information collected through the C-50 survey, which was first conducted in 1962. As a result, the Census introduced new weighting and tabulation procedures for data collected from 1984 through 1999 that show expenditures for these years to be consistently larger than originally reported.

According to the revised figures, remodeling expenditures totaled $142.9 billion last year. This is nearly 20 percent above the $120 billion that was estimated by the NAHB using earlier Census Bureau data. The revised 1999 figure is up 7 percent from the adjusted 1998 figure of $133.7 billion. Improvements, which include additions and alterations, accounted for 70 percent of total remodeling expenditures last year. The remaining 30 percent went toward maintenance and repairs.

"This is definitely good news, but I think the Census Bureau is telling us something that most remodelers around the country already knew," said Robert L. Mitchell, NAHB president and owner of a remodeling company in the suburban Washington, D.C. area. "Many of our member remodeling companies are barely keeping up with the rush of home owners over the last several years wanting to convert some of their equity into additional living space and new amenities for their homes."

For the fourth quarter of 1999, total expenditures for remodeling reached a seasonally adjusted annual rate of $165.2 billion, 12 percent above the third quarter rate of $147.3 billion. The fourth quarter figure represents a record level of remodeling activity; the previous peak occurred in the second quarter of 1998 with a seasonally adjusted annual rate of $151.7 billion.

Spending on improvements in the fourth quarter of 1999 took place at a seasonally adjusted rate of $120.8 billion; spending on maintenance and repairs amounted to $44.4 billion.

The U.S. Commerce Department’s C-50 survey of expenditures is one of only two national surveys that track improvements to the existing housing stock. Despite using a smaller sample than the U.S. Department of Housing and Urban Development’s American Housing Survey (AHS) and not offering that survey’s level of detail about specific projects, C-50 data is the sole source of information on improvements and repairs to rental, vacant and seasonal properties. These units, which comprise roughly one-third of the nation’s housing stock, accounted for $43.6 billion or 30 percent of all dollars spent on remodeling in 1999.

However, disagreement about the size of the remodeling market is not likely to be put to rest by the Census Bureau’s modifications. Even with the upward adjustment in the C-50 numbers, HUD’s biannual AHS survey still depicts American households spending more money on remodeling than does the Census Bureau. The latest AHS survey reports $242 billion in total expenditures for residential improvements in 1996 and 1997. For these same two years, the C-50 survey numbers add up to $182.5 billion, a discrepancy of nearly $60 billion.

Jan Willams, CGR, chair of the Remodelors Council, is encouraged by the new numbers and applauds the Census Bureau’s efforts to portray a more accurate picture of remodeling activity. "One thing we know for sure, the market isn’t shrinking. It will continue to grow at a healthy clip as long as the houses we live in keep getting older and as long as people’s lifestyles and tastes keep changing."

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