Home buying typically generates a wave of activity as people who purchase homes spend money on improving their homes, installing new appliances, buying furnishings, and other items. Buying and moving into a home is one of the most important financial decisions households make. It is therefore not surprising that NAHB’s analysis shows that a home purchase triggers a series of additional spending on appliances, furnishings, and remodeling activities that exceed typical spending levels of non-moving owners and persist for two years after moving. Specifically, the NAHB analysis shows that during the first two years after closing on the house a typical buyer of a new single-family detached home tends to spend on average $7,400 more than a similar home owner who does not move, including $4,900 in the first year after purchase. Likewise, a buyer of an existing single-family detached home tends to spend about $4,000 more than a similar non-moving home owner, including $3,600 during the first year.
The Data The standard source of data on consumer spending in the United States is the Consumer Expenditure Survey (CES) conducted by the US Bureau of Labor Statistics (BLS). The CES does not only detail consumer expenditures it also allows relating these spending to household characteristics such as income, socio-demographic characteristics, and, what is essential in this analysis, whether these households recently purchased homes. Compared to some other government household surveys, the CES sample is not particularly large - it collects spending data from 6,000 to 8,000 households every quarter – nor is it specifically designed to capture home buyers.
In order to create a meaningful sample of home buyers, this study merges the 13 quarters of CES spending data, from the first quarter of 2004 through the first quarter of 2007. Homes that were built in 2004 or later are defined as new homes. The created sample roughly reflects the national share of home buyers as captured in the American Housing Survey (AHS). According to the 2007 AHS, 1.7 percent of all single family detached home owners bought a new home and 5.4 percent bought an existing house (see Figure 1). To analyze spending pooled over several years, all expenditures and income were inflated to 2007 dollars using the Consumer Price Index (CPI).
Expenditure Levels Table 1 highlights some of the differences in spending behavior among the three groups of single family detached home owners: buyers of new homes, buyers of existing homes and non-moving owners. The numbers in the table are average annual spending on various appliances, furnishings and property alterations. During the first year after closing on the house home buyers tend to spend on these items considerably more compared to non-moving owners. Buyers of new homes spend most, $12,332, outspending non-movers 2.8 times. Buyers of existing homes spend $8,927, twice as much as non-moving owners. Nevertheless, in the aggregate, most of the demand for appliances, furnishings, and remodeling projects in a given year is generated by non-moving home owners, because they outnumber home buyers by such a wide margin.
Table 1. Single-Family Detached Home Owners' Average Annual Spending on Various Items, in 2007
Appliances Total appliance spending is highest for new home buyers, $2,769, compared with $1,919 for existing home buyers, and $1,065 for non-moving owners. Moreover, new home buyers outspend non-moving owners on every single appliance item listed in the CES. They also tend to outspend existing home buyers across almost the entire range of appliances. The few exceptions include lawn mowers, gas stoves, built-in dishwashers, and some other miscellaneous appliances.
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 only 30 percent of new homes built in 2007 came with clothes washers and dryers and around 55 percent had installed refrigerators. This is reflected in Table 1 showing that new home buyers spend the most on televisions, refrigerators, clothes washers/dryers, and computer systems - items that are less likely to be included in the price of new homes. Most expensive appliances in the budget of existing home owners are clothes washers/dryers, refrigerators, and lawn mowers.
Furnishings The biggest outlay in the budget of new home buyers is furnishings. They spend $5,288 on furnishings during the first year after buying home outspending buyers of existing homes 2.2 times and non-moving owners 5.3 times. The differences are not only largest but also most consistent when comparing expenditures on furnishings. Compared to non-moving owners, new home buyers spend more on every single item the CES counts as furnishings. They also outspend existing home buyers on nearly all furnishing items with the exception of non-permanent floor coverings and replacement of wall-to-wall carpeting.
The biggest ticket item for all households is bedroom furnishings, including mattresses. However, buyers of new homes spend on the this item twice as much as existing home buyers, $959 compared to $463, and outspend non-moving owners six times. This is not surprising considering that the number of bedrooms in new single-family detached homes has been on the rise. In 2007, three, four and more-bedroom houses accounted for 88 percent of all new single-family detached homes compared to only 75 percent in 1985, according to the US Census Bureau. The second largest furnishings outlay for home buyers is sofas. New home buyers spend $746 during the first year after moving, more than double of what old home buyers spend, and more than six times the amount spent on sofas by non-moving owners. The differences are even larger when comparing spending on window coverings. New homebuyers outspend existing home buyers 7.7 times ($672 compared to $87) and non-moving owners (with an average annual spending on window covering of $27) 24.7 times.
Property Repairs and Alterations Buyers of existing homes spend $4,642 on property alterations and repairs, compared to $4,275 spent by new home buyers, and $2,413 spent by non-moving owners. Considering that new home buyers move into new homes it might look surprising that they spend almost as much on property alterations and repairs as buyers of existing homes, but the specific types of remodeling projects are quite different across the groups. As expected, buyers of existing homes and non-moving owners spend more on various repairs and replacements. As a matter of fact, existing home buyers spend more than new home buyers on every single item the CES lists as a repair or replacement. They also outspend new home buyers on kitchen/bathroom addition or remodeling, and purchasing and installing new items such as HVAC, plumbing, electrical and security systems, paneling, flooring, siding, windows and doors. However, when it comes to outside additions and alterations, including addition of patio, terrace, new driveway, fence, new home buyers outspend existing home buyers and non-moving owners by far. There are several items where non-moving owners outspend homebuyers, including addition of detached garage, repairs of driveway/walk, siding/roofing, replacements and repairs of doors and windows.
Statistical Analysis Table 1 clearly illustrates that there are substantial differences in how much home buyers and non-moving home owners spend on appliances, furnishings and property alterations. However, these differences in spending patterns cannot be fully attributed to a home purchase. Home buyers and non-moving owners might have different income, education, tastes, preferences, and other socio-demographic characteristics that could potentially explain differences in their spending behavior. Table 2 demonstrates that there are indeed differences between home buyers and non-moving owners. Home buyers tend to be larger households with children, on average wealthier, better educated and concentrated in urban areas. Any of these factors could potentially contribute to higher spending on appliances, furnishings and remodeling.
Table 2. Characteristics of Single-Family Detached Home Owners
"New" Home Buyers
"Old" Home Buyers
Number of Cases
Region of Residence
Rural vs. Urban
Education of Respondent
Less than High School
College Graduate or more
Husband and Wife Only
HW, Child under 17
To control for the impact of household characteristics on expenditures, a statistical model was used. The analysis confirmed that household characteristics influence spending levels on furnishings, appliances, and remodeling. It also proved that a home purchase alters spending behavior of homeowners and that otherwise similar homeowners spend more across all three categories during the first year after buying home compared to non-moving owners (for readers interested in technical details, the statistical output is presented in the appendix of the article).
The analysis also showed that higher level of spending on furnishings and appliances tend to persist for two years after households move into a newly built home. In case of buyers of existing homes, only furnishings registered a statistically significant higher level of spending that persists for more than a year after a home purchase. Differences in remodeling spending compared to non-moving owners, however, tend to go away after one year for both buyers of new and existing homes. This is an intuitive result since most households would not want to spend years in a house with ongoing remodeling projects.
To illustrate the impact that a home purchase has on spending, the statistical estimates were used to predict spending levels of identical households that differ in only one way: one household buys a home and the other stays put in a house they already own. Table 3 presents estimates for households that have socio-demographic characteristics typical of a new home buyer. The first column shows predicted spending levels of this “typical” new home buyer that buys a new home, and the second column contains estimates for an identical homeowner that stays put. The last column captures differences in spending levels attributed to the purchase of a new house, controlling for differences in the household characteristics shown in Table 2.
The differences are largest on furnishings, more than $3,000 during the first year and exceeding $2,000 during the second year after closing on a new house. A typical new home buyer that actually buys a new home is also estimated to spend $1,005 more on appliances during the first year. The difference shrinks to $348 during the second year and goes away after that. In case of property repairs and alterations the differences are smallest, $740, and last only one year. Overall, over the two years after purchasing a new home, a typical new home buyer tends to boost spending on appliances, furnishings, and property alterations by additional $7,400 as a result of buying a new home.
Table 3. Spending of a "Typical" New Home Buyer
If Buying a New Home
If not Moving
Property Repairs and Alterations
Total: Alterations, Appliances, Furnishings
Table 4 presents results of a similar comparison for homeowners with characteristics typical of an existing home buyer. The “typical” buyer of an existing home tends to spend close to $4,000 more on remodeling, furnishings, and appliances compared to otherwise identical homeowners that do not move. Most of this extra spending goes to remodeling projects, more than $2,000, and occurs during the first year after closing on the house. Only the additional spending on furnishings tends to persist beyond the first year.
Table 4. Spending of a "Typical" Old Home Buyer
If Buying an Old Home
If not Moving
Property Repairs and Alterations
Total: Alterations, Appliances, Furnishings
A legitimate question is whether a higher level of spending on furnishings, appliances and property alterations is achieved by home buyers by economizing and cutting their spending on other items, such as entertainment, transportations, travel, food at home, restaurants meals, etc. The statistical analysis shows that while socio-demographic characteristics help explain household spending on other items, a home purchase does not have a significant effect on other spending outside of the three considered categories. Thus, homebuyers do not in general seem to pay for the added property alterations, appliances, and furnishings by economizing in other areas of spending.
 It is important to keep in mind that the averages reported in Table 1 are averages for all households in the group regardless whether they purchased a certain item/service or not. Thus, these averages are considerably lower than the expenditure by those households that actually purchased the item. The less frequently an item is purchased, the greater the difference between the average for all households in the group and the average of those purchasing..
 The particular technique is called Tobit regression analysis. This technique was selected because there was a large number of zero expenditures in the sample corresponding to households that reported no spending on either appliances, furnishings, or remodeling projects. In such cases, the traditional regression analysis (OLS) is known to produce biased estimates. To capture the effects of the CES sample design, the Tobit regressions were run within the balanced repeated replication (BRR) framework where target statistics are repeatedly re-estimated using half-sample replicate weights.
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