Kitchen & Bath Design News

MAY 2014

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Barometers { A look at key statistics & trends shaping the industry } 8 | Kitchen & Bath Design News May 2014 Impact of Millennials Seen as Positive for Future of Housing T he nat ion's housi ng m a r k e t , i m p a c t e d by persistently poor weather across much of the count r y, has been list less through the first quarter of 2014, although growth is antic- ipated as both the weather and market conditions continue to improve. Among the key statis- tics and forecasts released in recent weeks by government agencies, research frms and industry-related trade associa- tions were the following: HOUSING STARTS & NEW-HOME SALES Home builders are currently "in a holding pattern," with poor weather combining with a shortage of lots and labor to stunt growth, the National Association of Home Builders said last month. Growth is anticipated, however, as the winter weather pattern con- tinues to subside, according to the Washington, DC-based NAHB. "Competitive mortgage rates, afordable home prices and an improving economy all point to a continuing, gradual strengthening of housing activ- ity through the rest of the year," said NAHB Chief Economist David Crowe. "We still expect 2014 will be a strong year for housing." Crowe noted that building permits, a harbinger of future activity, have risen in recent months. Builders have also continued to increase their inventory of for-sale homes, in- dicating they still anticipate a relatively strong spring buying season, he added. EXISTING-HOME SALES Similar to the situation for housing starts, ongoing weath- er disruptions combined with the "frictions of constrained inventory, restrictive mort- gage-lending standards and (less favorable) housing af- fordability" (primarily rising prices) have put a damper on current existing-home sales, although improvement is ex- pected as the year unfolds. "With an expected pickup in job creation, home sales should trend up modestly over the course of this year," said Lawrence Yun, chief economist for the National Association of Realtors. According to the Washington, DC-based NAR, resales were pacing at a sea- sonally adjusted annual rate of 4.60 million, the slowest pace since July of 2012, when the number stood at 4.59 million. The median existing-home price for all housing types was $189,000, which is 9.1% above the same month a year ago, the NAR said. APPLIANCE SHIPMENTS Domestic shipments of ma- jor home appliances, after beginning 2014 with a mod- est gain, declined sharply in February, according to the Association of Home Appli- a nce Ma nu fac t u rer s. T he Washington, DC-based AHAM repor ted la st mont h t hat February appliance shipments totaled 4.28 million units, which was down 13.5% from the 4.95 million units shipped in February, 2013. Year-to- date shipments for the first two months of 2014 were run- ning 6.7% below the total for the frst two months of 2013, AHAM said. CABINET & VANITY SALES Sales of kitchen cabinets and vanities continued upward in February, the Kitchen Cabinet Manufacturers Association said last month. According to the Reston, VA-based KCMA, manufacturers participating in the association's monthly "Trend of Business" survey reported that February 2014 sales of cabinets rose 11.9% over the same month in 2013. Sales of stock cabinets gained 10%, while semi-custom cabi- net sales increased 12.6% a nd custom cabinet sa les rose a signifcant 19.4%, the KCMA said. Year-to-date sales through the month of Febru- ary were up 14.3% over the same two-month period in 2013, the KCMA added. MARKET ANALYSIS Washington, DC — Young home buyers, specifically Millennials, remain optimis- tic and see their home as a good investment – encour- aging news for the future of housing and remodeling, considering the size of the generation – according to the fndings of a new study conducted by the National Association of Realtors. The study noted that the Millennial Generation, which is under the age of 34, is now entering the peak period in which people typically buy a frst home, and "given that Millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underly ing dema nd," t he NAR said. The association adds that the "aspiration and long-term investment aspect to owning a home remains solid among young people." According to the NAR, the challenges of tight cred- it, limited inventory, eroding afordability and high-debt loads have limited the ca- pacity of young people to purchase a home. However, even with those market fric- tions, the NAR found that the largest group of recent buyers was the Millennials, sometimes called "Genera- tion Y" or "Generation Next" (those born between 1980 and 1995), who comprised 31% of recent purchases; fol- lowed closely by "Generation X" (those born between 1965 and 1979) at 30%. Percentages of recent home purchases among ear- lier generations were notably lower: 16% were Younger Boomers, those born between 1955 and 1964; 14% were Older Boomers, born between 1946 and 1954; and 9% were from the Silent Generation, those born between 1925 and 1945 (see pie chart, above). Fourteen percent of all home purchas es were by a multi-generational house- hold, consisting of adult siblings, adult children, par- ents and/or grandparents, the NAR further noted. Housing at Standstill, But Growth Foreseen Even with existing obstacles to purchase, the nation's largest group of recent home-buyers was the Millennials, sometimes called 'Generation Y' or 'Generation Next,' those born between 1980 and 1995, followed closely by 'Generation X', those born between 1965 and 1979 (see story below). The percentages of recent home purchases among earlier generations, including both younger and older Baby Boomers, were notably lower, as refected in the graphic to the left. COMPOSITION OF TODAY'S HOME-BUYING MARKET 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 birth year Baby Boomers Generation X Generation Z Source: National Association of Realtors 14% Younger Baby Boomers Older Baby Boomers Millennials/ 'Generation Y' 30% Generation X Silent Generation 9% 16% Generation Y 31% KBD_8-9_CBTbarometers.indd 8 4/15/14 2:03 PM

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