WASHINGTON (Reuters) - Americans stuck at home and with more discretionary funds at their disposal but fewer spending options because of the COVID-19 pandemic are piling into the stock market and sprucing up their homes, a survey showed on Tuesday.

The Conference Board's quarterly U.S. Consumer Dynamics Report showed 20% of consumers surveyed in the fourth quarter of 2020 invested in shares of stocks or mutual funds, up from 15% in the second quarter. No data was available for the third quarter.

"Trends like low interest rates and declining debt concerns, alongside below-normal spending on vacations and out-of-home entertainment due to pandemic restrictions, have left a portion of Americans with more disposable income and fewer ways to spend it," said Denise Dahlhoff, a senior researcher at The Conference Board. "Stocks, which continue to yield strong returns, have become an increasingly attractive option for these consumers."

The share of consumers spending more on home improvements increased to 24% from 21% in the second quarter. With the pandemic now in its second year, fewer Americans are going on vacations, buying new clothes and technology products.

The share of consumers spending money on holidays or vacations fell to 24% from 28% in the second quarter. Fewer are also spending on out-of-home entertainment and healthcare.

The share of consumers putting money into savings fell to 43% last quarter from 49% in second quarter, likely because of near zero interest rates.

But the pandemic has widened income inequality, which has been worsened by the so-called K-shaped recovery, with better-paid workers doing well while lower-paid workers are losing out.

The survey showed 26% of consumers were not paying off their debt, including credit cards and loans. Though that was down from 29% in the second quarter, it remained quite high. Just under a fifth of consumers were not putting money into a retirement fund and 10% said they had no cash to spare.

At least 17.8 million people are on unemployment benefits.

(Reporting By Lucia Mutikani; Editing by Dan Grebler)