New Home Buyers Invest in Home Projects
WASHINGTON, DC — A new consumer spending
Analysis has revealed that, in their first year of ownership, new home buyers spend an average of more than $10,000 on new appliances, furnishings and home improvement projects – 2.6 times as much in a typical year as homeowners who do not move. The analysis, released last month by the National
Association of Home Builders, is based on the U.S. Bureau of Labor Statistics’ “Consumer Expenditure Survey,” which helped quantify the money spent to make improvements as new owners personalize their homes. The findings are significant in that they reinforce the commonly held belief that first-year new- and existing-home buyers represent a key client cohort – and prospect base – for residential remodelers, including kitchen and bath designers. Of equal significance is the impact that home buying has on renovation, as well as on the overall U.S. economy (see related graphic, below). “While construction jobs are the most obvious impact
of new homes on the economy, it’s important to realize that it doesn’t stop there,” said NAHB Chairman Granger MacDonald. “It’s the architects, heating technicians, lumber suppliers and the mom-and-pop owners at the local furniture or appliance store who are helping these buyers make their house a home.” According to the Washington, DC-based NAHB, during the first two years after closing, a typical buyer of a newly built single-family home tends to spend on average $4,500 more than a similar non-moving homeowner. Likewise, a buyer of an existing single-family detached home tends to spend over $4,000 more than a similar non-moving home
owner, including close to $3,700 during the first year. Buyers of existing homes spend $4,085 on property alterations and repairs, compared to $3,729 spent by new-home buyers and $2,232 spent by non-moving owners, the NAHB said. They also outspend new-home buyers on kitchen and bathroom additions or renovations, and purchasing and installing items such as HVAC, plumbing, electrical and security systems, paneling, flooring, siding, windows and doors, the association added.
In contrast, average spending of new-home buyers on most of these items is negligible, suggesting that new-home buyers rarely spend on these items during the first year after moving. However, when it comes to outside additions and alterations, including a new driveway, walk or fence, newhome buyers significantly outspend existing-home buyers and non-moving owners. At the same time, non-moving owners outspend home buyers on most replacements, as well as on repairs of doors, windows and skylights. Other conclusions of the NAHB analysis were that:
• The most expensive appliances in the budget of existing-home
buyers are refrigerators/home freezers,
followed by clothes washers/dryers, televisions,
computer hardware/systems and lawnmowers.
New and existing home buyers spend even more
on furnishings than appliances. During the first
year after buying a home, new home buyers spend
$3,778 on furnishings, outspending old home buyers
by 70% and non-moving owners by 530%.
• Over the two years after a move, the “typical” buyer of an
existing home tends to increase their spending on remodeling,
furnishings and appliances by more than $4,100,
compared to otherwise identical homeowners who do
not move. Remodeling projects account for half of this
extra spending and mostly occur during the first year
after closing on the house. Only the additional spending
on furnishings tends to persist beyond the first year.
• There are significant demographic differences between
home buyers and non-moving owners. Home
buyers tend to be larger households with children
– and on average wealthier, better educated and concentrated
in urban areas. “Any of these factors could
potentially contribute to higher spending on appliances,
furnishings and remodeling,” the NAHB said.
• The purchase of either a new or existing home does
not have a significant effect on spending on entertainment,
apparel, transportation and restaurant meals.