After The Home Purchase: What Else Homebuyers Buy
A new home is likely to be the biggest purchase the average American makes. But that’s just the beginning of a year-long process of furnishing, decorating, personalization and enhancement for most home buyers. As the home-selling season begins to cool down, let’s take a look at some new research from the National Association of Home Builders on what home-buyers buy next.*
First-year spending
In fact, buyers of new or relatively new single-family homes spend an average of $8,600 on appliances, furnishings and property alterations in the first year of homeownership, about 2.5 times the $3,132 that an average non-moving home owner spends in a year. The average buyer of an older home -- one built between 10 and 20 years ago -- spends more than $6,500.
What’s more, a large share of this spending by new-home buyers takes place soon after the home is purchased. About half of the money the typical new home-buyer uses for property alterations in the first year is spent in the first quarter after the home purchase, and by the fourth quarter, spending reverts to the normal level of a non-moving owner. Spending on furnishings levels off by the end of the first year, and spending on appliances, too, returns to a normal level and sometimes even below normal by the fourth quarter. In sum, this trend is largely exhausted by the end of the first year.
Where does the money go?
First, furnishings – from sofas, chairs and tables to linens, rugs and blinds. Buyers of newer homes spend more than four times as much on furnishings than non-moving owners during the first year of homeownership – nearly $3,700 compared to $783. Living room, kitchen, dining room and bedroom furniture is high on home buyers’ shopping lists, along with blinds, curtains and carpeting.
Property alterations and repairs account for an average of just over $3,000 in spending for the typical new-home buyer’s first year. As you might expect, additions, decks and porches are among the high-ticket items on the list. Painting, fences, driveways and walks are common first-year expenses, while non-moving owners are more likely to spend their money on kitchen and bath remodeling, repairs and roofing. Buyers of older homes (10 to 20 years) old spend the most on remodeling and repairs, including plumbing-fixture and heating-equipment replacement.
Appliances account for about $1,900 in spending in the first year after a new home purchase. Interestingly, computer hardware, which may not fit the traditional concept of an appliance, makes up the largest share of spending in this category at an average cost of $249. Lawn mowing equipment, refrigerators, stereo equipment and televisions – items not usually included in the price of a new home – account for a high percentage of appliance spending.
The impact of home-building on the nation’s economy is stunning: the construction of 1,000 single-family homes generates just under $80 million in wages and $42.5 million in tax revenues and fees. NAHB’s study shows that after homes are built, home-buyer spending continues to benefit local economies, from landscaping and contracting businesses to appliance and furnishings retailers.
*NAHB calculations using data from the U.S. Bureau of Labor Statistic’ Consumer Expenditure Survey. A "new" home is a single-family detached house built between 1990 and 1997; an "older" home is one built between 1980 and 1989.
