NAHB: Home Purchases Trigger Big Spending on Remodeling, Appliances and Furnishings
Buyers of new and existing homes spend thousands of dollars more on appliances, furnishings and remodeling in the first year after a purchase compared to non-moving home owners, according to NAHB estimates using the Consumer Expenditure Survey (“CES”) data from the Bureau of Labor Statistics (“BLS”).
NAHB’s most recent estimates are based on the pre-pandemic 2017-2019 data and show that during the first year after closing on the house, a typical buyer of a newly-built single-family detached home spends on average $9,250 more than a similar non-moving home owner. Likewise, a buyer of an existing single-family detached home tends to spend over $5,240 more than a similar non-moving home owner.
NAHB’s analysis shows that a home purchase alters the spending behavior of home owners, who spend more on appliances, furnishings and remodeling compared to non-moving owners during the first year after moving.
Though it appears counterintuitive, the largest difference in spending between new home buyers and households that do not move are on property alterations and repairs. A typical new home buyer is estimated to spend almost twice as much on these projects ($9,288) compared to a similar household that stays put in a house they already own. A closer examination reveals that most of these extra spending is used on building outdoor features such as patios, pools, walkways and fences, as well as landscaping and various additions to the new house.
In the same way, moving into a new home triggers higher levels of spending on furnishings. A typical new home buyer that moves into a new home is estimated to spend close to $3,000 more on furnishings during the first year compared to a non-moving owner. In the case of appliances, the differences are smallest, but nevertheless, amount to $1,870.
Similarly, buying an older home triggers additional spending. The typical buyer of an existing home is estimated to spend $5,238 more on remodeling, furnishings and appliances compared to home owners that do not move. In the case of buying an older home, most of this extra spending goes to property repairs, alterations and various remodeling projects. Buyers of existing homes spend close to $7,400 on these projects during the first year after closing on the house; while home owners that do not move spend $4,282. For furnishings, buyers of existing homes boost their spending by over $1,360 during the first year after moving in. In the case of appliances, buyers of existing homes outspend similar non-moving owners by $768.
The statistical analysis further shows that this higher level of spending on furnishings, appliances and property alterations is not paid by cutting spending on other items such as entertainment, transportation, travel, food at home, restaurant meals, etc. This confirms that home buying indeed generates a wave of additional spending and activity not accounted for in the purchase price of the home alone.
NAHB economist Natalia Siniavskaia provides further analysis in this Eye on Housing blog post.
Natalia Siniavskaia – Media Contact – email@example.com – (202) 266-8441
Source: National Association of Home Builders