NAHB analysis of Consumer Expenditure Survey (CES) data from the Bureau of Labor Statistics shows that during the first year after closing on a home sale, home buyers tend to spend considerably more money on furnishings, appliances and remodeling compared to non-moving owners. Buyers of new homes spend most, spending four times as much as non-moving owners and twice as much as buyers of existing homes. This post reveals particular items that are most popular with home buyers and help explain changes in their spending behavior triggered by a house purchase.
It might come as a surprise but the biggest outlay in the budget of recent new home buyers is alterations and repairs. During the first year after closing, new home buyers spend close to $12,000 on these projects, while buyers of existing homes average less than half of that amount ($5,760). Non-moving owners spend even less on property alterations and repairs – under $3,000 in a typical year. The puzzle is easily solved by going over the list of the specific types of remodeling projects that homeowners engage.
New home buyers spend over $4,000 on building outdoor patios, walks, fences, pools, driveways and additional $3,167 on landscaping. In comparison, existing home buyers spend $512 on outdoor features and $335 on landscaping. The corresponding average spending by non-moving owners are $250 and $192 per year. Average spending is estimated for all households in the group regardless whether they purchased a certain item or not. Thus, higher averages may point to larger and/or more frequent spending by the group.
New home buyers also significantly outspend existing home buyers and non-moving owners when it comes to finishing a basement, attic, enclosing a porch ($1,740 vs $275 and $69, respectively) or building an addition or a new structure, including a porch ($1,003 vs $253 and $283).
At the same time, existing home buyers spend more than new home buyers on remodeling rooms, painting, wallpapering, plastering, flooring, roofing, insulation, siding, window panes, screens, storm doors, and HVAC work.
New home buyers also spend more on appliances – $4,254, compared with $2,500 for existing home buyers, and $1,442 for non-moving owners. On average, new home buyers tend to spend most on various types of television. Even though new television sets may not be the most expensive appliance new home buyers invest into, these are unlikely to be included in the price of the new home. As a result, buying television sets for multiple rooms in the new house can add up to the high level of spending, reflecting the high frequency of these purchases by new home buyers rather than a particularly high cost of the item.
The next biggest outlays in the appliance budget of new home buyers are clothes washers/dryers, lawnmowers/other yard equipment, and new refrigerators or home freezers. Coincidentally, new home buyers outspend existing home buyers and non-moving owners on all these big-ticket items.
The high level of spending by new home buyers may seem surprising considering that many new homes come with installed appliances but suggests that these purchases are nevertheless more frequent among these households. The Builder Practices Survey conducted by Home Innovation Research Labs shows that two thirds of new single-family detached homes built in 2019 came with no clothes dryers. At the same time, virtually all new homes came with cooking stoves, ranges, or ovens. This explains why new home buyers have lower spending on cooking stoves, ranges and minimal spending on built-in-dishwashers and microwave ovens. Rather, new home buyers spent most on items that are less likely to be included in the price of new homes.
The appliances that consume the largest share of the budget of existing homeowners are clothes washers/dryers, followed by refrigerators/home freezers, lawnmowers, televisions, and computer hardware/systems.
New and existing home buyers spend even more on furnishings than appliances. During the first year after moving, new home buyers spend $5,122 on furnishings. This is nearly twice as much as existing home buyers spend and 5.6 times higher, compared to non-moving owners’ spending on furnishings. The differences are not only large but also most consistent when comparing expenditures on furnishings. Compared to existing home buyers, new home buyers spend more on every single item the CES counts as furnishings. Existing home buyers, in turn, outspend non-moving owners on all furnishings with the only exception of non-electric cookware, where their annual spending is similar.
The two biggest ticket items for home buyers are sofas and bedroom furnishings, including mattresses and springs. On average, new home buyers spend close to $860 on sofas and $718 on bedroom furnishings. The corresponding spending by existing home buyers on these items average just over $610 during the first year after moving. This is considerably higher than non-moving owners typically spend on sofas ($148) and bedroom furnishings ($204) per year.
A home purchase, especially when it is a new home, has a particularly large effect on expenditures on window coverings (blinds, shades), as well as curtains and drapes. During the first year after moving, new home buyers spend $516 on window coverings outspending non-moving owners and existing home buyers 22 and 4 times, respectively.
The differences in spending patterns are similarly large when comparing spending on dining room and kitchen furniture. New homebuyers outspend non-moving owners 11 times over ($460 compared to $40), while existing home buyers (with an average annual spending on dining room and kitchen furniture of $207) outspend non-moving owners 5 times.
Even though during the first year after closing on the house, home buyers tend to spend on furnishings, appliances, and property alterations considerably more compared to non-moving owners, most of the demand for appliances, furnishings, and remodeling projects in a given year is generated by non-moving homeowners, because they outnumber home buyers by such a wide margin.