Survey: Few Used Energy Tax Credit in ‘06

A 2006 tax credit intended to help Americans defray the large increases in energy costs associated with heating and cooling homes was utilized by relatively few homeowners, despite awareness of the need for the home improvement purchases that underlie the credit.

A survey of 1,040 adults conducted for Johns Manville by Opinion Research Corp. reveals that while a high percentage of homeowners, 74 percent, were aware of the federal tax credit available under the Energy Policy Act of 2005, relatively few, 23 percent, took advantage of it for their 2006 taxes. This despite the fact that 78 percent of homeowners reported their 2006 heating/cooling costs increased 5 percent or more than their 2005 costs, and only 32 percent believe their home is already energy-efficient.

The Energy Policy Act of 2005 allows for a tax credit of up to 10 percent of the cost of materials for certain home improvements, such as installing Energy Star-qualified windows and air conditioners, or installing insulation and air sealing products. The law, which offers a tax credit of up to $500 per household, was created in response to record-high energy prices. According to the U.S. Energy Information Administration’s recently released Annual Energy Outlook 2007, energy prices are expected to increase steadily through 2030. The tax credit was available for the 2006 tax season, and homeowners can still take advantage of the credit with purchases made through December 31, 2007.

According to the Johns Manville survey, of the homeowners who took advantage of the tax credit, the most popular energy efficiency upgrade was adding insulation or air sealing (44 percent), closely followed by installing Energy Star-certified windows (40 percent).

According to the Harvard University School of Public Health, more than 60 percent of homes in the United States are underinsulated, and adding products such as attic insulation is one of the most cost-efficient ways to improve the energy efficiency of a home. The U.S. Department of Energy estimates that 40 percent of all air leaks in the average home are in the attic, and homeowners can expect to see up to a 30 percent savings on heating and cooling costs with a well-insulated and air-sealed home.

Kitchens & Baths

Cabinet sales off, but outlook remains positive

The nation’s residential remodeling market may be relatively stable, and steadily growing, but sales of kitchen cabinets and bathroom vanities are down significantly — a victim of continued softness in the market for new residential construction.

According to the latest figures released by the Kitchen Cabinet Manufacturers Association, sales of cabinets and vanities were down 17.1 percent in March from the level reported in the same month last year — with most of the decline in the stock cabinet sector, which fell by 24.3 percent. By comparison, custom cabinet sales were down a relatively small 8.4 percent for the month, while sales of semicustom cabinets were off by 9.9 percent. Overall, year-to-date cabinet sales were off 14.8 percent through March, said the KCMA, noting that surveyed participants include manufacturers whose combined sales represent more than 50 percent of the U.S. cabinet market.

The March declines, coming on the heels of four consecutive monthly declines prior to that month, are in sharp contrast to the 127 consecutive months of growth reported by the Reston, Va.-based KCMA prior to November 2006.

The declines, observed Dick Titus, KCMA executive vice president, mirror the market for new construction, where housing starts for the first quarter of 2007 were nearly 30 percent below the first quarter of last year. Housing starts rose 2.5 percent in April, to a seasonally adjusted annual rate of 1.528 million units, but were still down 16.1 percent from a year earlier, the government reported.

“Remodeling is softer than it has been, but the only negative, really, is new housing — particularly with the big builders,” Titus said, attributing the cabinet sales decline to regional factors, including poor weather, as well as to the ongoing housing slump.