Real Estate

Millennials and first-time homebuyers are spending a lot more on renovations, survey finds

Key Points
  • Millennials who renovated their homes spent an average $26,200 last year on the upgrades, according to the Houzz & Home Survey.
  • That's 7 percent more than they did the previous year, it said.
  • First-time homebuyers spent $33,800, representing 22 percent more.
Older generation fueling home renovations: Pro
Older generation fueling home renovations: Pro

Millennials are becoming homeowners much later than baby boomer did, but when they get there, they're spending more for renovations, according to an annual survey released Thursday.

That's a positive sign of confidence in the housing market, according to the Houzz & Home Survey.

The survey said that the 25-to-34-year-old age group spent an average $26,200 last year on the upgrades. That's 7 percent more than they did the previous year. First-time homebuyers spent $33,800, representing 22 percent more. Overall spending across all age groups was consistent year over year, according to the survey of residential remodeling, building and decorating activity.

"It's a pretty strong reflection of the housing market condition," Nino Sitchinava, principal economist at Houzz, told CNBC. "The home renovation market has mostly recovered, and is in line with the prerecession peak."

Still, those 55 and older continue to outspend millennials, nearly three times as much. Overall, homeowners who renovated last year spent an average of $60,400, about in line with the $59,800 on average in 2015, showed the survey from Houzz, an online platform for home renovation and design.

Another bright spot for housing confidence was large projects like kitchen, bathrooms, and exterior features, which Sitchinava said also got a boost in 2016. "Discretionary spending is clearly leading," she told "Squawk Box." "Those projects are typically done when times are good."

This year is set to be another banner year, according the survey, with more than half of homeowners on Houzz saying they plan to start renovations in 2017. They're looking to spend 4 percent more than in 2016.

In addition to the renovation survey, Houzz publishes a "Renovation Barometer," which tracks confidence in the home renovation market among industry professionals.

"The confidence these professionals have is what I call 'giddy high,'" Sitchinava said. A third or more of firms across industry groups said that last year was the best since 2007, according to the results.

"They're optimistic about what 2017 is likely to bring."

Firms were equally bullish for the 2017. A majority said their renovation and design businesses on Houzz anticipate growth, forecasting annual gross revenue to rise 10 to 12 percent on average, compared with 8 to 10 percent last year.

Financing of these projects was another key shift. While "cash is king," Sitchinava said, younger homeowners relied on credit to fund renovation projects. The use of credit cards to fund renovation projects jumped 2 percentage points to 23 percent year over year.

"We really haven't really seen changes in the way homeowners are leveraging home equity for example or other debt financing," Sitchinava said. "So the fact that credit cards are coming up to the line was pretty surprising."

The results are based on more than 100,000 responses to the survey, which was emailed to registered users of Houzz in the United States.