More Homeowners Choosing to Spruce Up Rather Than Sell

Recent data shows homeowners may be sticking around and remodeling to make their existing homes work.

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Consumers have been feeling a little more confident about their finances lately, and that's translated into an uptick in home remodeling over the past several months, according to recent data.

After being in the post-recession doldrums, the number of Americans spending cash to spruce up their homes is recovering, according the National Association of Home Builders, and it's not just fixing a sagging gutter here or a broken patio paver there.

The association's latest Remodeling Market Index rose to about 47, a big improvement from the quarter before, but just under the 50 benchmark, which indicates healthier demand for remodeling projects.

"There are a good number of people who are doing minor additions in the $10,000 to $25,000 range," says Nissa Hiatt of NAHB. "They might not be doing the entire floor of the house, but maybe [adding] the kitchen that they've always wanted."

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Mike Hydeck, president of the National Association of the Remodeling Industry and a Pennsylvania-based remodeling professional, agrees. Last year he had no contracts for additions, but this year he has two.

"People have been putting off doing things to their house and are ready to bust loose so to speak," Hydeck says. "Now it seems people are a little more attuned to the fact that things are getting better and looking into fixing the house."

According to the latest data from the Bureau of Economic Analysis, of the almost $330 billion spent on residential construction last year, almost half was spent on home improvements. That share is expected to pull back to about 45 percent in 2012, according to IHS, but it's still greater than new constructions, which hasn't historically been the case.

And it's no wonder, expert say. With the jobs market still unsteady and the housing market not looking much better, the prospect of buying a new home or selling an existing one remains daunting. Many times it's easier to qualify to finance a home improvement than it is to apply for a new mortgage, says Pat Newport, economist at IHS Global Insight.

"In a lot of cases, people just decided it wasn't worth trying to sell their house, so they spent money making their existing home work," he adds. "It's still going on today, primarily because it's so hard to qualify to get a loan."

[Read: Home Prices Hit New Lows.]

The most popular remodeling projects are still kitchens and bathrooms, Hydeck says, but consumers are being more cautious than they have in the past when committing to renovation projects with big price tags.

"They tend to take more time making decisions," he says. "Everything is checked, and doubled-checked, and triple checked."

With the unseasonably warm winter, construction and home improvement have seen a bump, which is likely to continue through the spring months as long as budget busters such as high gas prices don't get in the way.

"We've definitely seen the home improvement market come back," says Chris Christopher, another economist at IHS Global Insight who tracks retail trends. "Garden and building supply stores have made a significant comeback, much stronger than the overall housing market as a whole."

Twitter: @mmhandley

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