As homeowners regain equity in their properties and interest rates continue to increase, equity-financed home improvements will likely become more attractive to borrowers than short sales, home purchasing or refinancing.

Market changes suggest home equity lending demand will be on the rise, according to findings from the Corelogic April MarketPulse report.

In addition to home price appreciation and other factors, the report finds the expiration of the Mortgage Forgiveness Debt Relief Act "could be having an impact" on the recent decline in short sales. For example, CoreLogic data show that since the act expired on Dec. 31, 2013, borrowers are likely to decline a short sale without the tax exemption.

Plus, data released by the Bureau of Labor Statistics show by February, nationwide construction employment increased 2.6% year over year and has been increasing annually since June 2011. These seemingly tepid improvements however suggest the marketplace is getting stronger, "compared to the period of double-digit decreases in construction employment" from January 2009 to March 2010, the report notes.

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