Home improvement spending is expected to rise 5 percent in the United States in 2010, but the surge might not foretell an increase in sales of new homes.
Remodeling spending will increase this year due to the gradual recovery in the broader economy, according to the Joint Center for Housing Studies at Harvard University.
Last week, the center published its Leading Indicator of Remodeling Activity, which tracks such data points as building materials shipments and housing starts.
A spike in remodeling would be good news for homebuilders including No. 1 PulteGroup Inc , Lennar Corp and luxury builder Toll Brothers Inc if it meant homeowners were sprucing up their digs in order to sell and then buy again.
Homebuilders are suffering from a four-year slump that has dragged sales of new homes to a record low of 308,000 in February.
But an American Express Co survey found that only 5 percent of homeowners are preparing their homes for sale and that 53 percent see a seller's market at least two years away.
Slightly more than half do not think they would get their asking price if they were to sell now, according to the American Express survey, which polled a sample of 2,003 adults online between March 30 and April 2.
On average, homeowners plan to spend $6,200 in 2010 on remodeling, American Express said. Almost half said they are remodeling to improve their home's appearance.
Foreclosures could account for much of the remodeling activity because they tend to sit empty and sustain damage, said Stifel Nicolaus analyst Mike Widner.
Selling those after fixing them up would reduce supply, and that would help new home builders eventually. But for now, activity among move-up buyers is low and new home sales are extremely depressed, he said.
Remodeling will not translate into new home sales in the near term, Widner said, adding: Any activity that gets contractors employed, gets materials flowing, the housing sector active as a whole, is a positive.
(Reporting by Helen Chernikoff, editing by Gerald E. McCormick)