During the summer months, the majority of homeowners are expected to spend money on a home improvement project or addition, potentially reducing the amount they put toward retail purchases.
If a heightened level of projects leads to fewer retail sales, small-to medium-sized businesses might have to turn to inventory financing as cash flow could take a hit.
Three-in-five homeowners said they plan to invest in their homes this summer, as limited inventory and equity has led to many staying in their properties instead of purchasing a new home, according to the Zillow Digs Summer Home Improvement Trend and Spending Survey.
The median expenditure on a summer home improvement project is expected to be $1,200, but those with children and are 54 years and younger may spend as much as $1,500 on their projects.
"As we head into the long days of summer, we are seeing increased interest in outdoor spaces with very natural elements such as stone fireplaces, as well as bringing more light into bathrooms with clear glass on the walls and shower enclosures," said Cynthia Nowak, Zillow Digs trend expert.
Affordable mortgage rates could lead more to complete home improvement projects
One of the most popular ways to fund a home improvement is through refinancing, and with mortgage rates remaining affordable, more homeowners could choose to invest in their properties this summer.
Despite increasing for the past six weeks, fixed rates eased slightly in the week ending June 20, according to Freddie Mac's latest Primary Mortgage Market Survey.
Fifteen-year fixed-rate mortgages decreased to 3.04 percent, from 3.1 percent in the previous week, while 30-year FRMs were down to 3.93 percent.
Freddie Mac vice president and chief economist Frank Nothaft said rates eased as markets awaited the Federal Reserve's monetary policy announcement.
Retailers seeing slow sales could use inventory financing to stay afloat
With more homeowners spending on remodeling projects, they might not put as much money toward retail purchases. That being said, small-to medium-sized retailers could enter a period where cash flow lags.
During these trying times, it can be difficult to operate at normal levels, but inventory financing makes it possible. This type of asset-based lending allows businesses to use current inventory to obtain a revolving line of credit, which, in turn, can be used to help cover operating costs during seasonal lulls.