Higher interest rates, expensive building materials, and a slowdown in many housing markets have taken a bite out of home-improvement spending.
A May 1 report from the U.S. Census Bureau shows that expenditures for residential improvements grew by 9.2 percent in 2005, down from the 12.3 percent surge in 2004. A separate report on construction spending shows renovations in the first quarter are 10 percent less than a year ago.
Because home improvement spending typically trails trends in home sales, further weakness may be on the way.
While most housing analysts are optimistic about home improvement spending this year, the risk is growing that slowing home sales will cut sharply into retail sales of building materials and services, putting another drag on consumer spending.
Source: Business Week www.businessweek.com