Kitchen & Bath Design News

APR 2013

Kitchen & Bath Design News is the industry's leading business, design and product resource for the kitchen and bath trade.

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Barometers { A look at key statistics & trends shaping the industry } Recovery Momentum Continues to Build M omentum continued to build through much of the first quarter of 2013 for a sustainable recovery in the nation's housing market. Among the key statistics and forecasts released in recent weeks by government agencies, research frms and industryrelated trade associations were the following: mit numbers are also at their highest level since mid-2008, according to the NAHB. At the same time, sales of newly built, single-family homes are at their quickest pace since July of 2008, and the months' supply of new homes for sale is at its lowest level in nearly eight years, the Washington, DC-based NAHB said. 7% if inventory supplies remain low and buyer traffic continues to improve. Total housing inventory at the end of January fell to 1.74 million existing homes available for sale, the lowest housing supply since April of 2005, the NAR said. HOUSING STARTS EXISTING-HOME SALES Pending home sales rose in January, and have been above year-ago levels for the past 21 months, according to the National Association of Realtors, which noted that "favorable afordability conditions and job growth have unleashed pent-up demand" and are leading to the return of a seller's market (see related graphic, right). According to the Washington, DC-based NAR, most areas of the country are drawing down housing inventory, which has shifted the supply/ demand balance to sellers and sparked the strongest price growth in more than seven years. The NAR is projecting approximately 5 million existing-home sales in 2013, with price growth exceeding APPLIANCE SHIPMENTS Reports of steady demand for new homes "is quite positive in that it shows continued upward movement in singlefamily housing production and permitting activity for both single- and multi-family units," the National Association of Home Builder's Chief Economist David Crowe said last month. He added that the recent sharp decline in multi-family starts "refects an adjustment from an unsustainably large gain in December, and is consistent with the up-and-down swings that are often associated with that sector." According to the latest available numbers, single-family housing starts are pacing at their strongest levels since July, 2008. Per- THE SLOW, STEADY RISE IN PENDING EXISTING-HOME SALES TOTAL U.S. PENDING HOME SALES INDEX 100.4 89.3 2010 105.9 89.9 2011 2012 Jan. 2013 Source: National Association of Realtors Pending home sales, a sign of strength or weakness in the market for resales, continued to show improvement in January, Domestic shipments as refected in the graph above, and have been above yearof major home appliago levels for the past 21 months, according to the National ances began 2013 on Association of Realtors. Favorable afordability conditions and a positive note, risjob growth are responsible for unleashing pent-up demand ing 1.7% compared and sparking the strongest price growth in more than seven to the same month years, said the NAR, which is projecting approximately 5 million in 2012, according existing-home sales in 2013. The association's Pending Home to the Association Sales Index (PHSI) is a forward-looking indicator of existingof Home Appliance home sales, based on contract signings. Manufacturers. The Wa sh i n g ton , D C based AHAM reported last month that JanuCABINET & turers participating in the ary appliance shipments VANITY SALES association's monthly "Trend totaled 3.78 million units, up Sales of kitchen cabinets and of Business" survey reported from the 3.72 million units vanities opened 2013 with a that overall cabinet sales rose shipped in January, 2012. surge, rising sharply in the 17.3% in January, compared to Shipments were up most nomonth of January, compared January of 2012. Sales of stock tably in the categories of gas to the same month in 2012, accabinets gained 23.4%, while surface cooking units (32.3%), cording to the Kitchen Cabinet semi-custom sales increased gas ovens (22.7%), electric ovManufacturers Association. 10.8% and custom cabinet ens (20.6%) and dishwashers According to the Reston, sales rose 16.8%, the KCMA (14.9%), AHAM said. VA-based KCMA, manufacreported. MARKET ANALYSIS Key Obstacles Seen Thwarting More Robust Housing Recovery Washington, DC — The budding housing revival driven by pent-up consumer demand still faces a number of key obstacles, including tight credit for builders and the "precarious support system to housing that could threaten the fragile housing and economic recovery now under way," according to the National Association of Home Builders. "Many of our builder members are expressing increasing frustration that they can't get access to construction loans to develop lots in markets where demand is 10 | Kitchen & Bath Design News April 2013 on the upswing," reported Rick Judson, chairman of the Washington, DC-based NAHB. "Not only is this keeping workers sidelined, it's frustrating potential home buyers and slowing the recovery." Although some housing markets continue to struggle to recover from the downturn, conditions in a growing number of markets are improving, ofered Judson. "Un for t u nately, newhome production is facing a number of obstacles and failing to bounce back at a more robust rate," he added. "Builders can't obtain fnanc- ing to construct new homes and developers have not been able to restart the lot production pipeline because of the lack of credit, which is contributing to buildable lot shortages in some markets." Meanwhile, credit-worthy borrowers can't obtain mortgages, inaccurate appraisals are leading to cancelled home sales, and rising building material prices and spot labor shortages are pushing up costs and slowing down completion times, Judson noted. "After years of sub-normal household formations brought on by the Great Recession, more and more buyers are now facing a challenging reality as they venture into the housing market. Banks, appraisers and regulators swung the pendulum too far and have failed to return to normal business practices." To get production back on a frmer footing to meet rising demand, spur job growth and move the economy forward, the NAHB urged fnancial institutions and regulators "to ease tight credit conditions that no longer refect today's economic realities."

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