Homeowners spent record amount on remodeling

Real Estate Watch

January 30, 2000

Homeowners across the nation set a record for home improvements last year, spending $94.7 billion on remodeling expenditures in 1999, up 4.5 percent from 1998.

According to the Remodeling Activity Indicator (RAI) devised by Harvard University's Joint Center for Housing Study, home improvements surged in the fourth quarter and pushed the totals over the record mark.

"Given [the] continued strength in home-buying numbers and an all-time high homeownership rate, it is no surprise that Americans spent a record amount on home improvement in 1999," said Nicolas P. Retsinas, director of the Joint Center.

"The fourth-quarter surge is yet another dividend of this nation's remarkable prosperity," Retsinas said.

However, the Joint Center expects the home improvement growth rate to slow in 2000 with recent increases in home mortgage rates that are bringing home sales down.

"The most popular time for home improvement projects is immediately following the sale of a home," said Kermit Baker of the Joint Center.

The RAI is an annual figure released quarterly that is derived from four components: manufacturers' shipments of floor and wall tile products; retail sales at building materials and supply stores; sales of existing one-family homes; and the bank prime loan rate.

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