Tags: home | renovation | housing | real estate

WSJ: Americans Pour Record Amounts of Money Into Home Improvements

WSJ: Americans Pour Record Amounts of Money Into Home Improvements
(Dreamstime)

By    |   Wednesday, 26 July 2017 09:29 AM

Americans are pouring record amounts of money into home improvements this year as a shortage of new single-family homes across the U.S. pushes up prices and keeps many buyers out of the market.

Spending on renovations is forecast to grow 6.8 percent from a year earlier to $316 billion in 2017, according to The Wall Street Journal, citing a study from Harvard University’s Joint Center for Housing Studies.

“The burst of renovations has been a boon for contractors as well as big home-improvement companies, which have enjoyed strong revenue growth even as most other retailers are struggling,” the newspaper reported. “It also reflects rising home prices and growing consumer confidence, as people are once again willing to invest in their homes, either through savings or by tapping home equity.”

Analysts polled by FactSet forecast that home improvement chain Lowe’s Cos. will post adjusted earnings on a per-share basis of $4.62 in its current fiscal year, up from $3.99 a year earlier. Home Depot Inc. is forecast to report earnings of $7.24 in its fiscal year, up from $6.45 a year prior.

The results would be the highest since 2004, according to FactSet data cited by the WSJ.

“We turn away as much work as we do,” Bill Halliday, owner of Home Improvements of Vero Beach, in Florida, told the newspaper. “It used to be you could call me and I could get somebody to you in a couple of days. Now I can get somebody to you in four or five weeks.”

U.S. home prices reached a new high in May for the sixth straight month, raising fears of another housing bubble roughly a decade after a previous one burst, the Associated Press reported.

The Standard & Poor's CoreLogic national home price index gained 5.6 percent in May. That’s 3.2 percent higher than the July 2006 peak before the subprime bubble collapsed, triggering the worst economic collapse since the Great Depression.

Some analysts downplay the notion of a new bubble, and the unrelenting price increases may already be cooling sales. Other aspects of the last decade's housing boom and bust, such as rapid sales increases and surging home building, aren't happening now.

"Sooner or later something will have to give," Svenja Gudell, chief economist at Zillow, told the AP. "Demand will fade, builders will begin delivering more new homes and/or more sellers will start coming out of the woodwork. But for the time being, expect this strong sellers' market to continue."

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Americans are pouring record amounts of money into home improvements this year as a shortage of new single-family homes across the U.S. pushes up prices and keeps many buyers out of the market.Spending on renovations is forecast to grow 6.8 percent from a year earlier to...
home, renovation, housing, real estate
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2017-29-26
Wednesday, 26 July 2017 09:29 AM
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