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Barometers { A look at key statistics & trends shaping the industry } THE GROWING STRENGTH OF THE REMODELING SECTOR Recovery Seen Palpable, With Growth Ahead Housing indicators show gains and optimism for continued growth in the months to come. K ey indicators continue to point to a palpable recovery for housing and residential remodeling as 2013 gets underway, with additional growth seen occurring in the months ahead. Among the key statistics and forecasts released in recent weeks by government agencies, research prms and industryrelated trade associations were the following: HOUSING STARTS Nationwide housing production continues to recover at a slow but steady pace, amid improved conpdence in the marketplace. However, the housing sector still has ���a long way to go to get back to normal production as inaccurate appraisals, tight lending conditions for home buyers and policy uncertainties continue to impede the recovery,��� according to David Crowe, chief economist for the National Association of Home Builders. The latest government pgures have housing starts at a season- ally adjusted annual rate of 894,000 units, the highest pace of new-home construction since July of 2008. In other housing related news, the NAHB reported that builder confidence in the market for newly built, single-family homes posted a solid gain in November, 2012, bringing the confidence gauge to its highest point since May of 2006, while the number of housing markets showing improvement also expanded in November. EXISTING-HOME SALES Rising home prices have already resulted in a $760 billion growth in home equity during the past year, with a possible $1 trillion gain in 2013, the National Association of Realtors predicted last month. According to NAR Chief Economist Lawrence Yun, growing demand coupled with limited inventory is resulting in a rise in prices for existing homes throughout much of the country. Equity growth is considered SEASONALLY ADJUSTED REMODELING MARKET INDEX IN QTR. 3 OF PAST 7 YEARS 2006 46 2007 44 2008 32 2009 41 42 a key predictor of 2010 residential remodeling activity, since 2011 m a n y r en ov at ion projects are pnanced 2012 through home-equity loans and consumer The Remodeling Market Index (RMI) climbed to 50 in the third c on f idenc e tend s quarter of 2012, up from 45 in the previous quarter and reaching to r ise a s equ it y its highest point since the third quarter of 2005. An RMI above g rows. Accord i ng 50 indicates that more remodelers report market activity is to the latest pgures, higher compared to the prior quarter than report it is lower. The the national median overall RMI averages ratings of current remodeling activity with existing-home price indicators of future activity (see Market Analysis, below). was 11.1% above the Source: National Association of Home Builders same time a year earlier. This marked eight consecutive monthly yearance shipments totaled 4.23 Cabinet Manufacturers Asover-year increases, which million units, down 0.8% sociation. According to the last occurred from October from the 4.32 million units Reston, VA-based KCMA, 2005 to May 2006, the shipped in October, 2011. manufacturers participatNAR said. Year-to-date shipments for ing in the association���s the prst 10 months of 2012 monthly ���Trend of Business��� APPLIANCE were reported down a scant survey reported that overall SHIPMENTS 0.6% from January-October cabinet sales rose 18.4% in Domestic shipments of major of 2011, the Washington, DCOctober 2012, compared to home appliances were down based AHAM said. October of 2011. Sales of marginally in October of stock cabinets gained 26.1%, 2012 compared to the same CABINET & while semi-custom sales inmonth in 2011, according VANITY SALES creased 14.3% and custom to the Association of Home Sales of kitchen cabinets and cabinet sales rose 1.8%, the Appliance Manufacturers. vanities increased sharply in KCMA reported. Year-to-date The Washington, DC-based October of 2012, compared sales through October 2012 AHAM reported last month to the same month in 2011, showed an increase of 5.7%, that October, 2012 appliaccording to the Kitchen the trade association added. 43 50 MARKET ANALYSIS Residential Remodeling Activity Seen Tracking Higher Through Most of 2012 8 | Kitchen & Bath Design News January 2013 Washington, DC ��� The Remodeling Market Index (RMI) climbed to 50 in the third quarter of 2012, up from 45 in the previous quarter. That is the highest mark it has reached since the third quarter of 2005 ��� a positive development for the housing sector ��� according to the National Association of Home Builders. According to the NAHB, based in Washington, DC, the RMI component measuring current market conditions rose to 52 from 46 in the previous quarter, while the component measuring fu- ture indicators increased to 49 from 44. An RMI above 50 indicates that more remodelers report market activity is higher compared to the prior quarter than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future activity (see graph above). ���The strength of the RMI, especially in owner-occupied properties, shows that homeowners are investing in remodels as home prices stabilize,��� stated NAHB Remodelers Chairman George Moore Jr. ���As owners become more conpdent that investments in housing will hold onto their value, they���re beginning to undertake projects to improve their comfort.��� During the more di���cult economic times of the past few years, homeowners have been putting o��� making these changes. ���The improvement in the RMI provides more evidence that the remodeling industry is making the orderly recovery from its low point in 2009, as we���ve been expecting,��� added NAHB Chief Economist David Crowe.