Meltdown 101: What Are People Buying Now For the Home

August 20 -- What we're buying—and not buying—says a lot about how consumers are feeling these days.

It also says a lot about the American economy, considering that consumer spending accounts for 70 percent of all U.S. economic activity. Every time we go out to lunch, buy a new sweater or pick up a DVD, we're contributing to the retail sector, the biggest sector in the economy.

This week, companies from Home Depot to Target to Saks reported results for their latest quarters. Some were strong, some were weak. All tell tales of the consumer: thrifty, staying close to home, and focusing on basics.
Here's a look at what people are and aren't buying.

HOME

WHAT WE'RE BUYING: People are buying more garden products and paint, especially in areas with high foreclosure rates like California, according to Home Depot. CEO Frank Blake told investors that as homes are sold as part of the foreclosure process, that spurs sales of paint and carpet upgrades, since owners want to improve their new homes.

Lowe's reported that small projects were big winners in the second quarter—only the paint and nursery categories were doing better than a year earlier. The company said consumers—with an eye toward boosting the appearance of their homes—bought a lot of mulches, seed, and patio blocks.

There was also solid demand in faucet repair and for repair parts for outdoor power equipment. Tiller sales were also strong as consumers planted more gardens.

WHAT WE'RE NOT: Home Depot said consumers continued to limit their purchases of bigger items like appliances.

Purchases above $500 fell 16 percent compared to last year for Lowe's, which also noted last year's second quarter included the effects of a federal stimulus package that gave most consumers about $600, prompting sales of big-ticket items.

Sears said its decline in its home business, including appliances, continues to be affected by the state of the housing market.

Target said people limited their purchases of decorative home and garden items, with patio furniture a standout weakness. Target noted it had planned very conservatively for that category this year.

CONCLUSIONS: Consumers are staying close to home and they want it to look nice. But they're not committing to big purchases like patio furniture to spruce up their home.

They're tackling more projects themselves, especially smaller ones, and opting to fix a faucet themselves rather than call a plumber. They're also planting gardens, perhaps with an eye toward trimming their food budgets. And forget new appliances—they're making do with what they have.