Remodeling Rebounds in U.S. With Contractors: EcoPulse

Tim Rue/Bloomberg

A worker stacks cut glass at a manufacturing facility in Tacoma, Washington.

Economist Russell Price decided to get a head start on work hed been putting off for more than 10 years at his own house as he began to see an improvement in home-renovation data.

I thought things would be picking up, so I started the process of remodeling what I thought was early, said Price, senior economist at Ameriprise Financial Inc. (AMP) in Detroit.

In a telling sign hes not the only homeowner considering such projects, he said many of the contractors he contacted in April already were too busy to squeeze in additional work this year. Thats because more Americans are renovating their homes, and many are choosing to hire outside help instead of doing the projects themselves.

This is shaping up to be a strong year for home-improvement spending, according to Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado. Seasonally-adjusted annualized expenditures totaled about $136 billion in June and have bounced back from a recent trough of almost $105 billion in November 2012, Englund said, citing his own calculations using Census Bureau data.

Forty-three percent of U.S. homeowners surveyed last month by the website RemodelOrMove.com said they will renovate their residences this year, up from 41 percent in February and a five-year average of 33 percent. Among respondents, 74 percent plan to hire a general contractor for some or all of the work, compared with 73 percent in the previous survey.

The results show that activity is broadening, but its still more heavily skewed to people who were less impacted by the recession, said Dan Fritschen, the founder of the site, who has been tracking industry data since 2005. Thats in part because consumers who hire contractors tend to be wealthier than their do-it-yourself peers, so as their home values improved, they were able to pull the trigger more quickly on remodeling projects.

The median price of an existing house rose 13.5 percent to $214,200 in June from a year earlier, the biggest year-over-year increase since 2005 and seventh consecutive month that property values advanced more than 10 percent, according to data from the National Association of Realtors.

A continued improvement in home prices will add valuable equity to homeowners for future remodeling projects, James Metcalf, chief executive officer of USG Corp. (USG), said on a July 25 conference call. The Chicago-based manufacturer and distributor of building materials is forecasting low single-digit growth in its repair and remodeling business for the rest of the year as the residential recovery is intact, he said.

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Remodeling Rebounds in U.S. With Contractors: EcoPulse