Rise in Mortgage Rates Deplete Home Renovations

Latest figures show that the spending for home renovations are down 4.0% from October to November 2005, and are down 5.6% from November of 2004. Market analysts point fingers at the rising rates and slow moving properties for the downward trend. Americans spent nearly $150 billion last year in home renovations; 2005 remodeling spending rose 4.3% as a total, but cooled drastically in the last quarter.

The figures use many factors to gauge the home remodeling craze; materials bought and sold, number of contracts to independent businesses, sales of existing homes, and shipping of materials used by home owners and builders alike. While 2005 began with a bang, by October of 2005 it had turned more into a fizzle. The largest increase in 2005 was in building supplies for the garden.

Though owning a home is still the most financially sound investment a person can make, people are becoming shy about major renovations due to the softening market and slow property sales. Prices have also stabilized, and rates have risen, making home improvements a dull market for 2006.