The downturn in home sales may signal an uptick in home improvements as homeowners, content on staying put, mull projects to make their home more livable, attractive — or valuable.

Upgrades — if done well — can add monetary and intrinsic value to a home. That's good for homeowners when buyers eventually knock at the door. It's particularly good for homeowners in markets where housing values are appreciating above national norms. For every $1 they plow into their properties, they may see a greater-than-$1 return in terms of added value.

According to the Commerce Department, home sales dipped more than 4 percent in July. Some experts forecast a 10 percent slide in housing sales for 2006.

With more homeowners staying off the moving merry-go-round, improvement options may boil down to what the homeowner can afford and how to pay for everything from materials to contractor services.

This may bring the old standby, the home equity loan, into favor for many homeowners. The silver lining is that even as homeowners sit on the real estate sidelines, most home values continue to build. And as that value piles up, more money is available through home equity channels for home improvements or other ways the homeowner chooses to spend those funds.

Home equity is the difference between the market value of the house and the amount the homeowner has left to pay on their mortgage. If a home is valued at $250,000 and the mortgage loan amount to be paid is $75,000, then the homeowner has $175,000 in available equity.

"Even as rates have risen, we still see home equity as the finance option of choice for lots of homeowners," says Peggy Lawlor, senior vice president for Bank of America. "It's got the most flexibility, and the homeowner knows even as they sit back, their home continues to climb in value over the long term."

Lawlor says the bank does not track how homeowners spend home equity lines of credit, but "as we talk to homeowners, home improvement is the primary use."

While some homeowners earmark home equity money only for pricier projects, Lawlor says even less ambitious projects are prime uses for home equity funds.

"It's nice when people can really upgrade their kitchens, but they ought to consider home equity for smaller projects," she says. She defines smaller projects as $1,500 and up.

While consumers are tempted to whip out credit cards to pay for just about everything associated with a project, they might pause to weigh credit payments vs. home equity.

Credit card interest can pile up in a hurry if the balance is unpaid. Interest rates on unpaid credit card balances can easily be near 20 percent, while home equity rates are still in the single digit range.

Lawlor says most home equity loans can be a pleasant tax write-off even though funds are spent on items other than housing improvements.

"That's the real plus for using the value of your home to fund projects and other uses," Lawlor says. "It has tax benefits normally not associated with other forms of payment."