U.S. Home Renovation Expenditures Rise

U.S. consumers increased spending on their homes at a 6.1% annual pace in the first quarter, as low mortgage rates allowed homeowners to take out loans to make renovations, said a report from Harvard University’s Joint Center for Housing Studies.

The nation’s homeowners spent $119.9 billion on renovation supplies such as floor tile and kitchen sinks during the 12 months ended March 31, compared with $113 billion a year earlier, according to the Cambridge, Mass.-based center. The increase in spending follows a 5% gain in the fourth quarter.

Mortgage rates near a 40-year low have fueled mortgage refinancings and allowed homeowners to take out bigger loans and gain extra cash, helping to sustain the economy. About 35% of this extra cash is spent on home remodeling, said Kermit Baker, director of the center’s Remodeling Futures Program.