Housing Recovery Spurs Pickup in Remodeling

Housing & the Economic Recovery

Existing home sales dropped 1 percent in December because there just aren't many homes to buy, reports CNBC's Diana Olick; and assessing the headwinds the housing market faces, with CNBC's Jeff Cox and John Makin, AEI Resident Scholar.

O'Grady, who heads a research committee for the National Association of the Remodeling Industry, said two-thirds of the trade group's members expect to see a continued pickup in demand this year.

Some of that demand continues to come from homeowners looking to improve the energy efficiency of their homes, a spending category that held up well through the downturn, said Baker. That was partly spurred by government incentives during the economic stimulus program along with worries about volatile energy costs.

Some contractors in areas that sustained heavy damage from Superstorm Sandy told a recent NARI survey they were seeing an uptick in business for storm-related work.

Older homeowners fixing up their home for retirement are also a major source of new business for the remodeling industry, said Baker.

"Their share of spending went up pretty dramatically because they have more equity in their home compared to younger households," he said.

That trend is expected to continue, as many aging baby boomers decide to retrofit their homes to better accommodate their retirement years.

Younger households are also expected to move ahead on long-delayed projects to accommodate growing families. Some deferred repairs can only be postponed for so long.

As long as the overall economy continues to improve gradually, O'Grady expects remodeling demand to continue to pick up.

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Housing Recovery Spurs Pickup in Remodeling