Beautifying Over Building: What May Not Be Slumping

New home construction: Down. New home sales: Also down. They dropped 1.5 percent at the end of September to the fewest amount since early 2006.

But before you start thinking the only happening real estate in the U.S. involves tents and lean-tos, consider the recent slightly hopeful remodeling news.

Yes, it seems somewhat unlikely that has home values decrease, owners would pour money into fixing up their abodes. But that’s what some recent numbers indicate.

Take, for example, the 2006 survey of home electronics installing/dealer firms that found 52 percent of their revenue came from new construction and 48 percent — almost half — came from remodeling/retrofit work, according to the E-Commerce Times.

The market was better then; you’d expect home investments and building to be high. The National Association of Home Builders, in fact, called the strong remodeling returns in 2006 "the last gasp of the recent housing bubble."

The NAHB is predicting that the renovation market is just a step behind housing, about to ripple downward with housing for the rest of this year and part of next, recovering by 2009.

Seems like a logical theory. Or is it?

Remember that home electronics installing/dealer firms survey? The same study’s 2007 data indicates that, as housing slumped further, remodeling rose — this year to 51 percent of revenue, compared to new construction revenue, which dropped down to 49 percent.

Harvard’s Joint Center for Housing Studies says that "homeowner spending for home improvement activity will likely decline for the first time since late 2003" — but since this summer reports said it would hold steady and might even increase (according to Kitchen & Bath Design News), the Center’s projected 2.3 percent drop for the year may not hold true once the numbers have been run.

And even if it does, considering how terribly, horribly far the housing industry sales have fallen, is 2.3 percent even really that bad?

Kitchen & Bath Design News quotes NAHB Remodelers Chairman Mike Nagel as saying " the market has been buoyed by an increase in the number of homeowners requesting smaller-scale projects and home alterations.”

Well, some renovation is always necessary — things are going to break or need replacing. That’s what the NAHB calls the "counter-cyclical nature of spending for maintenance and repairs" (and what I, in the past, have called my flooring and windows.)

Vanity projects, however, are a different issue. The rental market started holding off on improvement renovations in 2005 and 2006, according to the NAHB.

Will housing follow? Are people who are afraid to try to sell their homes right now happy to splurge on home additions? And what does that mean for — and indicate about — the housing industry?

Check the MHN Out and About blog Tuesday for more surprising news about the state of the U.S. residential remodeling industry, You won’t believe what’s happening — and what’s being added — in some communities…