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New homeowner's next big buy

Tuesday, June 18, 2013 - 01:46

June 18 - As more Americans move into new homes, sales of so-called ''white goods'' are being closely watched as a key indicator of the consumer mindset. Bobbi Rebell reports.

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As more Americans finally make the move into new homes- so are new appliances. Think sales of so-called "white goods' like refrigerators, and stoves. And that's helping America's bottom line. UBS economist Sam Coffin: SOUNDBITE: SAM COFFIN, ECONOMIST, UBS (ENGLISH) SAYING: "From household durable goods that aren't autos and from residential equipment investment we are looking at about a one percentage point to GDP growth over the past year so its about half of what we've been seeing in terms of total growth has come from that household sector spending " But while there is a connection between buying a home and buying the stuff that goes in it- it's not as solid as one might think. Jim Yin of S&P Capital IQ: SOUNDBITE: JIM YIN, EQUITY ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "People buy their new homes and then eventually they move in and then they figure out if they want to keep the old appliances or buy new ones so there is somewhat of a lag effect that normally occurs." That's also in part because the lifecycle of many appliances is between 7 and 15 years. The peak of the housing bubble was about 5 or 6 years ago. The major appliance manufacturing industry in North America has been declining since 2006 when the housing market weakened. But Yin says the industry is projected to grow at a compound annual growth rate of 2.8% through 2016 to $19.8 billion, as the housing market slowly recovers. Appliance makers, many of whom have had to raise prices because of higher materials costs, are trying to get consumers to upgrade before they need to: SOUNDBITE: JIM YIN, EQUITY ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "Cost improvement in energy that is a big factor. I think another big factor now is just new technology. That is more upper end scale." He says new features like WiFi connectivity are helping companies boost average selling prices- and get customers motivated to upgrade before they have to.

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New homeowner's next big buy

Tuesday, June 18, 2013 - 01:46