Home sales may be stagnant but, according to data released on Monday by Buildfax, homeowners are increasingly upgrading the homes they already have.  The company, which maintains a nationwide building and permitting data base, said that remodeling activity reached a record high in July as consumers put more discretionary income into their homes.  This has also increased the number of under-insured properties to record highs.

The BuildFax Remodeling Index (BFRI) for July indicates that residential remodeling activity registered the 21st straight month of year-over-year gains indicating, the BFRI report says, that consumers are continuing to remodeling rather than purchase new homes and do so even as fears of a double-dip recession grow and unemployment remains above 9 percent.  

The July index was up 24 percent from one year ago and, at 130.4 is the highest number since the index began in 2004.  The index was up in all regions, rising 26 percent in the Western region, 5.6 percent in the Midwest, 7 percent in the South and 0.7 percent in the Northeast.  The West and Midwest were also higher than in the previous month (3 percent and 5 percent respectively) while both the Northeast and South saw month-over-month declines of slightly more than 3 percent.

At the same time that there has been an upswing in the sales of materials and the numbers of renovations exceeding $10,000 there is an indication that homeowners have not increased the insurance on their homes to reflect the new, true value of the structure.

"As millions of Americans believe that they will not be able to secure a new home due to a variety of factors including tight credit, limited buyers and challenging job prospects, they are more and more turning to renovating and remodeling their current properties, sending remodeling activity to record levels," said Joe Emison, Vice President of Research and Development at BuildFax. "However, this remodeling boom is leaving many of these properties under-insured, as the value of these renovations are often not being captured by the homeowners' insurance companies."