A home purchase sparks an increase in consumer spending — buying new appliances and furnishings, as well as spending on remodeling — that can last for two years, according to the National Association of Home Builders’ analysis of the Consumer Expenditure Survey.
The analysis puts a dollar sign on just how much more home buyers who purchase new and existing homes are likely to spend following a move versus those who don’t move. During the first two years after closing on a house, a buyer of a new single-family home will spend an average of $7,400 more than a similar home owner who doesn’t move. They’ll spend the majority of that amount in the first year: $4,900. Meanwhile, a buyer of an existing single-family home will spend about $4,000 more than a home owner who doesn’t move — $3,600 of which will be spent during the first year.
“This confirms that home buying indeed generates a wave of additional spending and activity not accounted for in the purchase price of the home alone,” writes NAHB on its Eye on Housing blog.
A new-home buyer will spend an average of $3,000 more on furnishings than a similar household who hasn’t moved. In the second year of home ownership, new buyers will likely spend an additional $2,000 more on furnishings. They will also spend more on appliances, usually in the first year of owning, spending $1,005 more on appliances during the first year than a non-moving home owner.
For property repairs and alterations, the difference in expenditures is the smallest, with new-home buyers spending $740 more on property alterations compared to non-moving households.
Source: “The Ripple Effect on Home Buying,” Eye on Housing (Oct. 9, 2013)
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