Americans spent $215 billion on remodeling in 2005, the first year spending has topped the $200 billion mark, according to data released Tuesday by the National Association of Home Builders.
Post-Hurricane Katrina construction, a backlog of remodeling projects due to strong home sales and increased homeowner equity all contributed to the jump in spending.
Those factors should also keep the industry growing for at least the next two years, said Dave Seiders, the association’s chief economist. His forecast calls for 13 percent growth in 2006 and 9 percent growth in 2007.
“This is an aggressive forecast for the remodeling sector,” he said, noting that it predicted growth despite a slowdown in home sales. “Remodeling is cyclical and the real value numbers typically do come down in a slow down period.”
There is usually a two-year period between purchasing a home and embarking on a remodeling project, Seiders said, but because the market was unusually frenzied, a backlog has developed. As a result, the remodeling industry will have plenty of work in 2006 and 2007 even if home sales do slow.
In the Washington region, where the housing market was particularly hot, the only problem contractors are having is keeping up with the demand, said Vince Butler, chairman of the NAHB Remodelers Council and president of Butler Brothers Corp., a Northern Virginia-based remodeling company.
“Labor availability remains for us the single biggest threat,” he said. “We could do considerably more business with more labor.”
The majority of the growth in remodeling can be attributed to aging baby boomers, said Butler.
“Consumers are really interested in not only making their houses livable, but in the concept of adapting the house to their needs as they change over time, whether that’s personal or taking care of another generation,” he said.
For the home
» Remodeling projects by homeowners account for 77 percent of the industry. The other 23 percent are remodeling projects on rental properties.
» The most popular remodeling projects continue to be kitchens and baths. However, the focus has shifted from whirlpool tubs to steam showers.
» “Great rooms” have also increased in popularity.
