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Home improvement sector sees upturn in business; Many people attracted by cost considerations

After several years of perusing real estate listings and spending Sunday afternoons at open houses, Denise Majeski decided to stay put and fix up her 25-year-old Gurnee, Ill., home.

As the housing market languished even as the economy improved, Maje-ski determined the financially prudent course would be to fix up the house a little at a time, starting with replacing the windows and renovating the bathrooms.

"Initially we were thinking about moving," said Majeski, 55. "But that would require a mortgage and additional amounts of money. We can do a home improvement at a pace that we can afford."

It is a choice more homeowners are making these days and one that is lifting the fortunes of the long-suffering home improvement industry.

Seasonal hiring at Lowe's Cos., the nation's No. 2 home improvement retailer, is up 15 percent this spring as homeowners, feeling more secure in their jobs, tackle maintenance projects delayed during the recession.

And Home Depot Inc., the largest home improvement retailer, reported in February its first annual sales increase since 2006, before the housing market crashed.

Valu Home Centers, a chain of 41 stores headquartered in Buffalo, has seen an upturn in business, as well, said Rick Arena, executive vice president.

"We are also seeing an upturn with more interest in do-it-yourself [work] instead of hiring people," Arena said.

Customers are picking up project-related items, such as flooring, paint and bathroom-related products, Arena said.

This also is the time of year Valu also starts staffing up in anticipation of spring, when things typically get busier, he said.

The home improvement business is stabilizing despite the continued weakness of the housing market, Home Depot Chief Executive Frank Blake.

"People are doing what it takes to be happy where they are," said Jack Horst, retail strategist at Kurt Salmon, a consulting firm. "They are more likely doing maintenance and replacement than big fundamental changes."

A few buckets of paint, brighter lighting and some new door handles are enough to make Rebecca and Bill Klies happy in their new home. The couple, in their 30s, bought their first condo last October in a short sale -- in which a lender allows a homeowner to sell a property for less than the amount owed on the mortgage.

Now, the Klieses spend weekends at Home Depot and Lowe's getting ideas on how to fix up their West Loop loft without spending a fortune. They've swapped out light fixtures, recaulked the shower, put up new towel racks, installed a ceiling fan in the bedroom, bought new light switch plates, painted several rooms and touched up the molding.

"These are simple little fixes that make a big difference overall," said Rebecca Klies.

At the same time, home improvement stores are getting an extra sales boost as homeowners dig out from a winter of record snowfalls and lengthy cold spells. The severe weather has left shingles, gutters and downspouts in need of repair and lawns littered with broken shrubs and damaged trees.

"These are the have-to-do projects," said Jim Kane, president of Home Depot's Northern Division. "We've just come through a tough winter, and the winter has just taken its toll on all those things."

Maintenance and repairs account for about 40 percent of Home Depot sales, up sharply from recent years when home sales slowed, said Daniel Binder, an analyst at Jefferies & Co., in a report last month.

Spending on home remodeling is expected to rise 9.1 percent in the first quarter to $125.1 billion from the same period a year ago, according to a widely followed index from Harvard University's Joint Center for Housing Studies. The last time remodeling activity for a three-month period topped $125 billion was the second quarter of 2008.

The center predicts the industry to gain momentum this spring with sales jumping 12.7 percent, to $132.9 billion, in the second quarter from a year ago, before tapering off to a 6.5 percent gain, to $123.5 billion, in the third quarter.

News Business Reporter Matt Glynn contributed to this report.

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