PORT WASHINGTON, NY, May 3, 2007 –The home improvement industry may be in for a boost according to new research from The NPD Group, Inc., leading provider of consumer and retail information. Results of a new NPD survey, “Home Buying and Remodeling,” reveal that higher income consumers and older consumers are now favoring remodeling over trading up to new homes.
As the real estate market has softened, higher income consumers (those making more than $100 thousand a year) say they are less likely to buy a new home and more likely to remodel, according to the survey. Less than one quarter of those consumers said they were planning to purchase a home in the next year. However, when asked about remodeling 41% said they were planning to remodel their current home. “This result could be attributed to higher-priced homes seeing larger impacts as a result of minor changes in the market,” says Mark Delaney, director, home improvement. “For example, a two percent swing on a $200,000 house is much less of an impact than the same percentage swing on a $600,000 house.”
Like higher income consumers, older consumers (those 55 years of age and over) are less likely to purchase a home and more likely to remodel, according to the survey. “This could indicate that higher-end or ‘trade-up’ homes are going to be soft in terms of sales over the next year or so,” says Delaney.
On the other hand, the NPD survey found that younger consumers, 25 to 44 years of age, are more likely to purchase a home than older and wealthier consumers. In fact, more than one-third of them plan to buy a home in the next twelve months. “The reasons could be that they’re typically more comfortable with debt or that the job market is still relatively strong. Therefore, the younger consumer may be at less risk given they have a longer term outlook on how they handle the changing market, and the housing market is still one of the best long term investments a young person can make,” says Delaney.
“The results of the NPD survey suggest the trend for some demographic groups will shift from buying to improving their homes, resulting in an opportunity for home improvement retailers. This bodes extremely well for the remodeling market in the near future, especially if retailers keep an eye on the high end and items that improve ones lifestyle,” ended Delaney.
Source: The survey was fielded from April 5 to April 19, 2007. The findings presented here are based on information from 23, 956 returns from NPD’s online consumer panel.
About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, visit www.npd.com.